European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<div>
<p><strong>Discounts to NAV for our selected European holdcos have widened in January</strong>, in line with equity markets drifting lower. The general recommendation is to wait for discounts to widen before setting up positions.</p>
</div>
<div>
<ul style="list-style-type: disc;">
<li>The current premium of <a href="https://www.smartkarma.com/entities/bhp-group-ltd" target="_blank" data-smartkarma-citation="entities:147:1" rel="noopener">BHP Group (BHP AU)</a> vs.  <a href="https://www.smartkarma.com/entities/bhp-billiton-plc" target="_blank" data-smartkarma-citation="entities:21840:1" rel="noopener">Bhp Billiton (BLT LN)</a> is <strong>20.3%</strong> (vs. 24.6% as of 31 December, and vs. 20.5% at the end of September), against a 10-year average of 14.5%.</li>
<li>
<a href="https://www.smartkarma.com/entities/corp-financiera-alba-sa" target="_blank" data-smartkarma-citation="entities:21245:1" rel="noopener">Corp Financiera Alba Sa (ALB SM)</a> is trading at a <strong>47.4% discount to NAV</strong> (up from 44.3% by end of December, but down from 49% at the end of October).</li>
<li>The discount to NAV of <a href="https://www.smartkarma.com/entities/groupe-bruxelles-lambert-sa" target="_blank" data-smartkarma-citation="entities:21332:1" rel="noopener">Groupe Bruxelles Lambert Sa (GBLB BB)</a> is 33.2% (vs. 32.9% at the end of December).</li>
<li>The discount in <a href="https://www.smartkarma.com/entities/heineken-holding-nv" target="_blank" data-smartkarma-citation="entities:21118:1" rel="noopener">Heineken Holding NV (HEIO NA)</a> relative to <a href="https://www.smartkarma.com/entities/heineken-nv" target="_blank" data-smartkarma-citation="entities:21117:1" rel="noopener">Heineken NV (HEIA NA)</a>is 15.5% (12.3% as of 30 November) vs. an average of 10.5% for the last 15 years, and 7.9% for the last five years.</li>
<li>
<a href="https://www.smartkarma.com/entities/industrivarden-ab" target="_blank" data-smartkarma-citation="entities:22395:1" rel="noopener">Industrivarden AB (INDUA SS)</a> C shares are are trading at a 7.8% discount to NAV (vs. 4.2% at the end of December and 6.7% at the end of November).</li>
<li>The discount to NAV of <a href="https://www.smartkarma.com/entities/investor-ab" target="_blank" data-smartkarma-citation="entities:22397:1" rel="noopener">Investor AB (INVEB SS)</a> B shares has widened to 15.9% (vs. 13.5% as of 30 December).</li>
<li>
<a href="https://www.smartkarma.com/entities/kinnevik-ab" target="_blank" data-smartkarma-citation="entities:22407:1" rel="noopener">Investment Ab Kinnevik (KINVB SS)</a> B shares are trading at a 4.2% discount to NAV (vs a 5.2% premium as of 31 December).</li>
<li>
<a href="https://www.smartkarma.com/entities/royal-dutch-shell-plc-98de2c77-62f2-46da-88eb-af269fb53d42" target="_blank" data-smartkarma-citation="entities:28510:1" rel="noopener">Royal Dutch Shell PLC (RDS/B US)</a> “B” shares trade in New York at a discount of approximately 4.1% with respect to the <a href="https://www.smartkarma.com/entities/royal-dutch-shell-plc-adr" target="_blank" data-smartkarma-citation="entities:792:1" rel="noopener">Royal Dutch Shell Plc (Adr) (RDS/A US)</a> “A” shares.</li>
</ul>
</div>


Discounts to NAV for our selected European holdcos have widened in January, in line with equity markets drifting lower. The general recommendation is to wait for discounts to widen before setting up positions.



The current premium of BHP Group (BHP AU) vs.  Bhp Billiton (BLT LN) is 20.3% (vs. 24.6% as of 31 December, and vs. 20.5% at the end of September), against a 10-year average of 14.5%.

Corp Financiera Alba Sa (ALB SM) is trading at a 47.4% discount to NAV (up from 44.3% by end of December, but down from 49% at the end of October).
The discount to NAV of Groupe Bruxelles Lambert Sa (GBLB BB) is 33.2% (vs. 32.9% at the end of December).
The discount in Heineken Holding NV (HEIO NA) relative to Heineken NV (HEIA NA)is 15.5% (12.3% as of 30 November) vs. an average of 10.5% for the last 15 years, and 7.9% for the last five years.

Industrivarden AB (INDUA SS) C shares are are trading at a 7.8% discount to NAV (vs. 4.2% at the end of December and 6.7% at the end of November).
The discount to NAV of Investor AB (INVEB SS) B shares has widened to 15.9% (vs. 13.5% as of 30 December).

Investment Ab Kinnevik (KINVB SS) B shares are trading at a 4.2% discount to NAV (vs a 5.2% premium as of 31 December).

Royal Dutch Shell PLC (RDS/B US) “B” shares trade in New York at a discount of approximately 4.1% with respect to the Royal Dutch Shell Plc (Adr) (RDS/A US) “A” shares.



Selected European Holdcos and DLCs: January Report

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<p>2021 has been a good year to put on trades betting on discount tightening on Swedish holdcos, especially since May, and for Unilever. It has been generally mixed for other holdcos followed in these reports.</p>
</div>
<div>
<ul style="list-style-type: disc;">
<li>The current premium of <a href="https://www.smartkarma.com/entities/bhp-group-ltd" target="_blank" data-smartkarma-citation="entities:147:1" rel="noopener">BHP Group (BHP AU)</a> vs.  <a href="https://www.smartkarma.com/entities/bhp-billiton-plc" target="_blank" data-smartkarma-citation="entities:21840:1" rel="noopener">Bhp Billiton (BLT LN)</a>  is 24.6% (vs. 20.5% at the end of September), against a 10-year average of 14.2%.</li>
<li>
<a href="https://www.smartkarma.com/entities/corp-financiera-alba-sa" target="_blank" data-smartkarma-citation="entities:21245:1" rel="noopener">Corp Financiera Alba Sa (ALB SM)</a> is trading at a 44.3% discount to NAV (down from 49% at the end of October).</li>
<li>The discount to NAV of <a href="https://www.smartkarma.com/entities/groupe-bruxelles-lambert-sa" target="_blank" data-smartkarma-citation="entities:21332:1" rel="noopener">Groupe Bruxelles Lambert Sa (GBLB BB)</a> is 32.9%.</li>
<li>The discount in <a href="https://www.smartkarma.com/entities/heineken-holding-nv" target="_blank" data-smartkarma-citation="entities:21118:1" rel="noopener">Heineken Holding NV (HEIO NA)</a> relative to <a href="https://www.smartkarma.com/entities/heineken-nv" target="_blank" data-smartkarma-citation="entities:21117:1" rel="noopener">Heineken NV (HEIA NA)</a> is 15.5% (12.3% as of 30 November) vs. an average of 10.5% for the last 15 years, and 7.9% for the last five years.</li>
<li>
<a href="https://www.smartkarma.com/entities/industrivarden-ab" target="_blank" data-smartkarma-citation="entities:22395:1" rel="noopener">Industrivarden AB (INDUA SS)</a> C shares are trading at a 4.2% discount to NAV vs. 6.7% at the end of November.</li>
<li>The discount to NAV of <a href="https://www.smartkarma.com/entities/investor-ab" target="_blank" data-smartkarma-citation="entities:22397:1" rel="noopener">Investor AB (INVEB SS)</a> B shares has tightened to 13.5% (vs. 19% of 30 October) in line with the vaccine driven market rally.</li>
<li>
<a href="https://www.smartkarma.com/entities/kinnevik-ab" target="_blank" data-smartkarma-citation="entities:22407:1" rel="noopener">Investment Ab Kinnevik (KINVB SS)</a> B shares are trading at a 5.4% premium to NAV (vs a discount of 8.3% as of 30 September).</li>
<li>
<a href="https://www.smartkarma.com/entities/royal-dutch-shell-plc-98de2c77-62f2-46da-88eb-af269fb53d42" target="_blank" data-smartkarma-citation="entities:28510:1" rel="noopener">Royal Dutch Shell PLC (RDS/B US)</a> “B” shares trade in New York at a discount of approximately 4.1% with respect to the <a href="https://www.smartkarma.com/entities/royal-dutch-shell-plc-adr" target="_blank" data-smartkarma-citation="entities:792:1" rel="noopener">Royal Dutch Shell Plc (Adr) (RDS/A US)</a> “A” shares.</li>
</ul>
</div>


2021 has been a good year to put on trades betting on discount tightening on Swedish holdcos, especially since May, and for Unilever. It has been generally mixed for other holdcos followed in these reports.



The current premium of BHP Group (BHP AU) vs.  Bhp Billiton (BLT LN)  is 24.6% (vs. 20.5% at the end of September), against a 10-year average of 14.2%.

Corp Financiera Alba Sa (ALB SM) is trading at a 44.3% discount to NAV (down from 49% at the end of October).
The discount to NAV of Groupe Bruxelles Lambert Sa (GBLB BB) is 32.9%.
The discount in Heineken Holding NV (HEIO NA) relative to Heineken NV (HEIA NA) is 15.5% (12.3% as of 30 November) vs. an average of 10.5% for the last 15 years, and 7.9% for the last five years.

Industrivarden AB (INDUA SS) C shares are trading at a 4.2% discount to NAV vs. 6.7% at the end of November.
The discount to NAV of Investor AB (INVEB SS) B shares has tightened to 13.5% (vs. 19% of 30 October) in line with the vaccine driven market rally.

Investment Ab Kinnevik (KINVB SS) B shares are trading at a 5.4% premium to NAV (vs a discount of 8.3% as of 30 September).

Royal Dutch Shell PLC (RDS/B US) “B” shares trade in New York at a discount of approximately 4.1% with respect to the Royal Dutch Shell Plc (Adr) (RDS/A US) “A” shares.



Selected European Holdcos and DLCs: December Report

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<p>About eight weeks ago, immediately after the Reverse Book Build Auction for the Delisting Exit Offer for <a href="https://www.smartkarma.com/entities/vedanta-ltd" target="_blank" data-smartkarma-citation="entities:514:1" rel="noopener">Vedanta Ltd (VEDL IN)</a> failed and then about 10 days after the failure I wrote a pair of insights looking at what might happen next. </p><p>In the first - <em><a href="https://www.smartkarma.com/insights/vedl-delisting-fail-day1-reading-between-the-lines-of-the-trading-data" target="_blank" data-smartkarma-citation="insights:44103" rel="noopener">VEDL Delisting Fail Day1 - Reading Between the Lines of the Trading Data</a></em> on 12 October, I pointed out six possible reactions by VEDL and VEDR (Vedanta Resources). My preferred choice was that VEDL would use the money it had raised recently to conduct an Open Offer Buyback to reduce "leakage" of the benefits of share ownership to outside parties (principally, the pass-through dividends from <a href="https://www.smartkarma.com/entities/hindustan-zinc-ltd" target="_blank" data-smartkarma-citation="entities:8688:1" rel="noopener">Hindustan Zinc (HZ IN)</a> and the 30% payout ratio of the other non-HZ businesses which are part of the Dividend Distribution Policy), using the excuse that a large percentage of the ownership had shown that they wanted to sell at INR 135-140/share.</p><p>VEDL was cheap even at the forecast depressed earnings level, and it "owed" cash to its shareholders.</p><p><em>The stock was cheap (the close that day was INR 96.95), so it was a buy. </em></p><p>Eight days later in <a href="https://www.smartkarma.com/insights/vedanta-limited-caught-in-economic-purgatory-but-governance-hell" target="_blank" data-smartkarma-citation="insights:44350" rel="noopener">Vedanta Limited - Caught in Economic Purgatory but Governance Hell?</a> I discussed the issue of VEDL having "fallen" in Dante's Inferno but might have walked itself back up through the maze to Purgatory economically, while its lending of funds to its parent Vedanta Resources represented ongoing governance faults.</p><p>Hindustan Zinc had just announced an INR 21.3/share dividend which meant VEDL "owed" INR 25+/share to its own shareholders this fiscal year as the pass-through, and while its global peers had seen both share prices and forward multiples bounce, VEDL was at its cheapest level against peers in many, many years, with ongoing desire by the VEDR parent to fix its leakage problem.</p><p><em>Governance was clearly a problem, but the stock was cheap, so it was a buy.</em></p><p>Eight weeks later, as I write, the stock is at INR 142.00. Including the INR 9.5/share dividend paid, the value to shareholders from that 12 October post-RBB failure is +56%. Including the dividend, the stock is INR 10/share higher than it got in the runup to the Reverse Book Build, </p><p>Then we got a dividend announcement from VEDL, H1 earnings, amended forecasts, an activist/complaining shareholder, and more news of funding issues and corporate action potential at the parent. </p><p>The stock is now, as I write is INR 143.55. Including INR 9.5 dividend paid, the value to shareholders from that 12 October post-RBB failure is +57% in eight weeks. </p><p>Including the previous dividend, VEDL is up single digits year-to-date. A Basket of Peers is +41% ytd. This insight discusses where we stand. </p>

About eight weeks ago, immediately after the Reverse Book Build Auction for the Delisting Exit Offer for Vedanta Ltd (VEDL IN) failed and then about 10 days after the failure I wrote a pair of insights looking at what might happen next. In the first - VEDL Delisting Fail Day1 - Reading Between the Lines of the Trading Data on 12 October, I pointed out six possible reactions by VEDL and VEDR (Vedanta Resources). My preferred choice was that VEDL would use the money it had raised recently to conduct an Open Offer Buyback to reduce "leakage" of the benefits of share ownership to outside parties (principally, the pass-through dividends from Hindustan Zinc (HZ IN) and the 30% payout ratio of the other non-HZ businesses which are part of the Dividend Distribution Policy), using the excuse that a large percentage of the ownership had shown that they wanted to sell at INR 135-140/share.VEDL was cheap even at the forecast depressed earnings level, and it "owed" cash to its shareholders.The stock was cheap (the close that day was INR 96.95), so it was a buy. Eight days later in Vedanta Limited - Caught in Economic Purgatory but Governance Hell? I discussed the issue of VEDL having "fallen" in Dante's Inferno but might have walked itself back up through the maze to Purgatory economically, while its lending of funds to its parent Vedanta Resources represented ongoing governance faults.Hindustan Zinc had just announced an INR 21.3/share dividend which meant VEDL "owed" INR 25+/share to its own shareholders this fiscal year as the pass-through, and while its global peers had seen both share prices and forward multiples bounce, VEDL was at its cheapest level against peers in many, many years, with ongoing desire by the VEDR parent to fix its leakage problem.Governance was clearly a problem, but the stock was cheap, so it was a buy.Eight weeks later, as I write, the stock is at INR 142.00. Including the INR 9.5/share dividend paid, the value to shareholders from that 12 October post-RBB failure is +56%. Including the dividend, the stock is INR 10/share higher than it got in the runup to the Reverse Book Build, Then we got a dividend announcement from VEDL, H1 earnings, amended forecasts, an activist/complaining shareholder, and more news of funding issues and corporate action potential at the parent. The stock is now, as I write is INR 143.55. Including INR 9.5 dividend paid, the value to shareholders from that 12 October post-RBB failure is +57% in eight weeks. Including the previous dividend, VEDL is up single digits year-to-date. A Basket of Peers is +41% ytd. This insight discusses where we stand. 

Vedanta Vaulting Near 2020 Highs On Higher Commods, Higher Forecasts, But Open Offer Remote?

<div>
<p>With this report, I continue the monthly series on some of the main European holding companies that I deem interesting to long/short clients.</p>
</div>
<div>
<ul>
<li>The current premium of <a href="https://www.smartkarma.com/entities/bhp-group-ltd" target="_blank" data-smartkarma-citation="entities:147:1" rel="noopener">BHP Group (BHP AU)</a> vs.  <a href="https://www.smartkarma.com/entities/bhp-billiton-plc" target="_blank" data-smartkarma-citation="entities:21840:1" rel="noopener">Bhp Billiton (BLT LN)</a>  is 23.5% (vs. 20.5% at the end of September), against a 10-year average of 14.2%.</li>
<li>
<a href="https://www.smartkarma.com/entities/corp-financiera-alba-sa" target="_blank" data-smartkarma-citation="entities:21245:1" rel="noopener">Corp Financiera Alba Sa (ALB SM)</a> is trading at a 43.8% discount to NAV (down from 49% at the end of October).</li>
<li>The discount to NAV of <a href="https://www.smartkarma.com/entities/groupe-bruxelles-lambert-sa" target="_blank" data-smartkarma-citation="entities:21332:1" rel="noopener">Groupe Bruxelles Lambert Sa (GBLB BB)</a> is 30.8%.</li>
<li>The discount in <a href="https://www.smartkarma.com/entities/heineken-holding-nv" target="_blank" data-smartkarma-citation="entities:21118:1" rel="noopener">Heineken Holding NV (HEIO NA)</a> relative to <a href="https://www.smartkarma.com/entities/heineken-nv" target="_blank" data-smartkarma-citation="entities:21117:1" rel="noopener">Heineken NV (HEIA NA)</a> is 12.3% (12.9% as of 30 October) vs. an average of 10.5% for the last 15 years, and 7.9% for the last five years.</li>
<li>
<a href="https://www.smartkarma.com/entities/industrivarden-ab" target="_blank" data-smartkarma-citation="entities:22395:1" rel="noopener">Industrivarden AB (INDUA SS)</a> C shares are trading at a 6.7% discount to NAV vs. 5.9% at the end of November.</li>
<li>The discount to NAV of <a href="https://www.smartkarma.com/entities/investor-ab" target="_blank" data-smartkarma-citation="entities:22397:1" rel="noopener">Investor AB (INVEB SS)</a> B shares has tightened to 15% (vs. 19% of 30 October) in line with the vaccine driven market rally.</li>
<li>
<a href="https://www.smartkarma.com/entities/kinnevik-ab" target="_blank" data-smartkarma-citation="entities:22407:1" rel="noopener">Investment Ab Kinnevik (KINVB SS)</a> B shares are trading at a <strong>11.4% premium to NAV</strong> (vs a discount of 8.3% as of 30 September).</li>
<li>
<a href="https://www.smartkarma.com/entities/royal-dutch-shell-plc-98de2c77-62f2-46da-88eb-af269fb53d42" target="_blank" data-smartkarma-citation="entities:28510:1" rel="noopener">Royal Dutch Shell PLC (RDS/B US)</a> “B” shares trade in New York at a discount of approximately 4.1% with respect to the <a href="https://www.smartkarma.com/entities/royal-dutch-shell-plc-adr" target="_blank" data-smartkarma-citation="entities:792:1" rel="noopener">Royal Dutch Shell Plc (Adr) (RDS/A US)</a> “A” shares.</li>
<li>
<a href="https://www.smartkarma.com/entities/unilever-plc" target="_blank" data-smartkarma-citation="entities:22197:1" rel="noopener">Unilever PLC (ULVR LN)</a> said on 30 November that the company had completed the unification of its U.K. and Dutch listed entities.</li>
</ul>
</div>


With this report, I continue the monthly series on some of the main European holding companies that I deem interesting to long/short clients.



The current premium of BHP Group (BHP AU) vs.  Bhp Billiton (BLT LN)  is 23.5% (vs. 20.5% at the end of September), against a 10-year average of 14.2%.

Corp Financiera Alba Sa (ALB SM) is trading at a 43.8% discount to NAV (down from 49% at the end of October).
The discount to NAV of Groupe Bruxelles Lambert Sa (GBLB BB) is 30.8%.
The discount in Heineken Holding NV (HEIO NA) relative to Heineken NV (HEIA NA) is 12.3% (12.9% as of 30 October) vs. an average of 10.5% for the last 15 years, and 7.9% for the last five years.

Industrivarden AB (INDUA SS) C shares are trading at a 6.7% discount to NAV vs. 5.9% at the end of November.
The discount to NAV of Investor AB (INVEB SS) B shares has tightened to 15% (vs. 19% of 30 October) in line with the vaccine driven market rally.

Investment Ab Kinnevik (KINVB SS) B shares are trading at a 11.4% premium to NAV (vs a discount of 8.3% as of 30 September).

Royal Dutch Shell PLC (RDS/B US) “B” shares trade in New York at a discount of approximately 4.1% with respect to the Royal Dutch Shell Plc (Adr) (RDS/A US) “A” shares.

Unilever PLC (ULVR LN) said on 30 November that the company had completed the unification of its U.K. and Dutch listed entities.



Selected European Holdcos and DLCs: November Report

<div>
<p>With this report, I continue the monthly series on some of the main European holding companies that I deem interesting to long/short clients.</p>
</div>
<div>
<p>The discounts to NAV of Industrivärden and Kinnevik have considerably tightened. It is time to unwind them, and wait for the discounts to widen before setting up the trades again.</p>
</div>
<div>
<p>The most compelling situations in this report are GBL and Investor AB. The spread in Unilever is less than okay, but safe. It should close in a month as a result of the share unification.</p>
</div>


With this report, I continue the monthly series on some of the main European holding companies that I deem interesting to long/short clients.


The discounts to NAV of Industrivärden and Kinnevik have considerably tightened. It is time to unwind them, and wait for the discounts to widen before setting up the trades again.


The most compelling situations in this report are GBL and Investor AB. The spread in Unilever is less than okay, but safe. It should close in a month as a result of the share unification.


Selected European Holdcos and DLCs: October Report

Australia

BHP Group Plc operates as a resource mining company. The Company focuses on minerals, metals, petroleum products, and oil and gas extraction and processing activities, as well as provides marketing services. BHP Group serves customers worldwide.

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BHP Group UK (BHPBF US)

Selected European Holdcos and DLCs: January Report

Discounts to NAV for our selected European holdcos have widened in January, in line with equity markets drifting lower. General recommendation:...

Jesus Rodriguez Aguilar

Selected European Holdcos and DLCs: December Report

Interesting long/short situations are: premium of BHP AU vs. BLT LN is 24.6% , HEIO NA relative HEIA NA, 15.5% discount, Investor (13.5% discount...

Jesus Rodriguez Aguilar

Vedanta Vaulting Near 2020 Highs On Higher Commods, Higher Forecasts, But Open Offer Remote?

Vedanta Ltd is up 55+% in eight weeks since the failed RBB. EBIT forecasts are up just as much, and a Peer Basket is now >40%ytd. An Open Offer...

Travis Lundy

Selected European Holdcos and DLCs: November Report

Holding companies have reduced their discount to NAV during November. Kinnevik is trading at a premium to NAV. Interesting trades are GBL, and in...

Jesus Rodriguez Aguilar

Selected European Holdcos and DLCs: October Report

The most compelling situations in this report are GBL and Investor AB. The spread in Unilever is less than okay, but safe. It should close in a...

Jesus Rodriguez Aguilar

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)