European Event-Driven Analyst

Jesus Rodriguez Aguilar

Jesús is an Insight Provider (Event-driven) on the Smartkarma network, where he looks across sectors at opportunities arising from securities mispricing (both credit and equity), share classes, bid announcements, prospective bids, and special situations. He has served as Economic and Business Advisor at the Spanish Congress in Madrid. Prior to that, he has worked in the City of London: as a Credit Analyst at Bloomberg; Event-driven associate at former boutique European Research; and doubled as Special Situations and Equity-linked VP (convertible bonds) at Merrill Lynch. Jesús has an MBA from the London Business School, a BA (Hons.) degree in Economics from the Complutense University in Madrid, and a BA (Hons.) in Law from U.N.E.D., also in Madrid.

Selected European Holdcos and DLCs: March Report

Selected European Holdcos and DLCs: April Report

Selected European Holdcos and DLCs: May Report

Selected European Holdcos and DLCs: December Report

Selected European Holdcos and DLCs: November Report

Selected European Holdcos and DLCs: January Report

IFM Investors to Launch a Partial Hostile Tender Offer for Naturgy

Event-Driven

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<p>Discounts to NAV for our selected European holdcos and DLCs have generally widened in February, specially at the end of the month. The report incorporates the results for the Swedish holdcos, as well as for C.F Alba, as well as several SOTPs.</p>
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<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 19.9% (vs. 24.6% as of 31 December), against a 10-year average of 14.5%. I would rather be long the UK plc and short the Aussie Ltd. through US listings.</li>
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<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>47.9% discount to NAV</strong> (up from 44.3% by end of December, but down from 49% at the end of October), partly because of its low liquidity. The discount does not seem to be arbitraged lately. <a href="https://www.smartkarma.com/entities/naturgy-energy-group-sa" target="_blank" data-smartkarma-citation="entities:21271:1" rel="noopener">Naturgy Energy Group SA (NTGY SM)</a>, one of its portfolio main assets, is being the subject of a partial takeover bid, and Euskaltel may be a candidate to be acquired in any further consolidation in the Spanish telco market. Alba has some quality assets and is fundamentally cheap, in my view.</li>
<li>The discount 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> has widened to 34.2% as of 26 February (vs. 32.9% as of 30 December). I recommend Long GBL / Short main listed assets (LafargeHolcim, SGS, Pernod Ricard, Adidas and Umicore, which represent c. 75% of NAV).</li>
<li>The discount in Heineken Holdings relative to Heineken has tightened to 12.9% (vs. 15.4% at the end of January) vs. an average of 10.5% for the last 15 years, and 7.9% for the last five years. Recommendation is long Heineken Holdings, short Heineken.</li>
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<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 7.8% discount to NAV (vs. 4.2% at the end of December and 6.7% at the end of November. I would wait for the discount to widen before entering the trade again.</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 17.1% (vs. 13.5% as of 30 December). Long Investor B, short main assets.</li>
<li>From my SOTP valuation, <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 3.9% discount to NAV (vs a 5.2% premium as of 31 December).</li>
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<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 closed February in New York at a discount of  5.2% (4.4% as of 31 December) 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. Trade: LONG RDSB ADR/SHORT RDSA ADR. Target: 2% premium.</li>
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Discounts to NAV for our selected European holdcos and DLCs have generally widened in February, specially at the end of the month. The report incorporates the results for the Swedish holdcos, as well as for C.F Alba, as well as several SOTPs.



The current premium of BHP Group (BHP AU) vs.  Bhp Billiton (BLT LN) is 19.9% (vs. 24.6% as of 31 December), against a 10-year average of 14.5%. I would rather be long the UK plc and short the Aussie Ltd. through US listings.

Corp Financiera Alba Sa (ALB SM) is trading at a 47.9% discount to NAV (up from 44.3% by end of December, but down from 49% at the end of October), partly because of its low liquidity. The discount does not seem to be arbitraged lately. Naturgy Energy Group SA (NTGY SM), one of its portfolio main assets, is being the subject of a partial takeover bid, and Euskaltel may be a candidate to be acquired in any further consolidation in the Spanish telco market. Alba has some quality assets and is fundamentally cheap, in my view.
The discount of Groupe Bruxelles Lambert Sa (GBLB BB) has widened to 34.2% as of 26 February (vs. 32.9% as of 30 December). I recommend Long GBL / Short main listed assets (LafargeHolcim, SGS, Pernod Ricard, Adidas and Umicore, which represent c. 75% of NAV).
The discount in Heineken Holdings relative to Heineken has tightened to 12.9% (vs. 15.4% at the end of January) vs. an average of 10.5% for the last 15 years, and 7.9% for the last five years. Recommendation is long Heineken Holdings, short Heineken.

Industrivarden AB (INDUA SS) C shares 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. I would wait for the discount to widen before entering the trade again.
The discount to NAV of Investor AB (INVEB SS) B shares has widened to 17.1% (vs. 13.5% as of 30 December). Long Investor B, short main assets.
From my SOTP valuation, Investment Ab Kinnevik (KINVB SS) B shares are trading at a 3.9% discount to NAV (vs a 5.2% premium as of 31 December).

Royal Dutch Shell PLC (RDS/B US) “B” shares closed February in New York at a discount of  5.2% (4.4% as of 31 December) with respect to the Royal Dutch Shell Plc (Adr) (RDS/A US) “A” shares. Trade: LONG RDSB ADR/SHORT RDSA ADR. Target: 2% premium.



Selected European Holdcos and DLCs: February Report