Fundamental Analyses, Contrarian Cashflows

Contrarian Cashflows

Fundamental Analyses

The purpose of Contrarian Cashflows is to document my investment research and share it with everyone who is interested in value investing. My long term aspiration for Contrarian Cashflows is to become a platform for professional investors and serious amateurs where they can get inspiration and discuss investing-related topics.
I plan to publish one company deep dive per month that is guided by my investment approach. All information I use for my write-ups is publicly available and most of the time directly sourced from public filings issued by the respective companies. To guarantee maximum transparency, for every post I provide a list of all used sources in the resources section.
Contrarian Cashflows is built around the principles of respect, honesty, open-mindedness and a touch of humour. Please consider these principles in any engagement interaction with me, other readers and the content on this blog. Misbehaviour is not tolerated.
If you want to reach out to me directly, the best way is via LinkedIn, Twitter or email. You can find the details at my homepage contrariancashflows.com

Thematic (Sector/Industry)

<ul>
<li>There were no changes to the portfolio in June.</li>
<li>The two major news among my holdings come from Norbit and Lindbergh.</li>
<li>Norbit acquired Innomar, a market leader in sub-bottom profilers in the maritime industry, to strengthen their oceans segment product offering.</li>
</ul>


There were no changes to the portfolio in June.
The two major news among my holdings come from Norbit and Lindbergh.
Norbit acquired Innomar, a market leader in sub-bottom profilers in the maritime industry, to strengthen their oceans segment product offering.


Equity Bottom-Up

Solid State PLC distributes electronic components for use in the industrial, automotive, mobile phone, computer and military markets of the United Kingdom. The Company also provides technical support to its customers.  The Company has agreements to supply products to nine electronic components manufacturers, mainly into the UK market. ... More

<ul><li>Solid State (SOLI) is a British electronics manufacturer and distributor specializing in mission-critical components and systems for industries with high regulatory barriers.</li><li>The founding families still lead the company, owning over 13% of outstanding shares. Since 2010, the CEO has driven annual sales and EPS growth of 18%.</li><li>Despite this strong track record, the shares trade at a normalized 7.3% owner earnings yield and an 11.1 adj. EV/EBIT.</li></ul>

Solid State (SOLI) is a British electronics manufacturer and distributor specializing in mission-critical components and systems for industries with high regulatory barriers.The founding families still lead the company, owning over 13% of outstanding shares. Since 2010, the CEO has driven annual sales and EPS growth of 18%.Despite this strong track record, the shares trade at a normalized 7.3% owner earnings yield and an 11.1 adj. EV/EBIT.

Solid State: Compounding Shareholder Capital in Industries with High Regulatory Barriers to Entry

<ul>
<li>
Welcome back to the portfolio updates series!
</li>
<li>
I recently read Michael J. Mauboussin’s book, More Than You Know, which is full of practical investment lessons drawn from various fields not necessarily related to investing.
</li>
<li>
The quote below is from a chapter discussing market efficiency and cautioning investors against misusing behavioral finance to conclude that humans are irrational, and therefore, markets must be irrational as well.
</li>
</ul>



Welcome back to the portfolio updates series!


I recently read Michael J. Mauboussin’s book, More Than You Know, which is full of practical investment lessons drawn from various fields not necessarily related to investing.


The quote below is from a chapter discussing market efficiency and cautioning investors against misusing behavioral finance to conclude that humans are irrational, and therefore, markets must be irrational as well.



Indian Energy Exchange Ltd / Equity Bottom-Up

Indian Energy Exchange Limited operates a power trading platform for the physical delivery of electricity. The Company enables price discovery and risk management for participants of the electricity market. Indian Energy Exchange serves metal, food processing, textile, cement, ceramic, chemicals, automobiles, and information technology industries in India.

<ul><li>As one of the fastest-growing economies globally, India is projected to become the third-largest economy, trailing only China and the US, by 2027.</li><li>Amid macroeconomic challenges worldwide, investors are eager to tap into India’s robust economic growth.</li><li>However, economic growth does not always correlate with equity market growth, as seen in Spain and Italy during the 1980s and 1990s, and more recently in China.</li></ul>

As one of the fastest-growing economies globally, India is projected to become the third-largest economy, trailing only China and the US, by 2027.Amid macroeconomic challenges worldwide, investors are eager to tap into India’s robust economic growth.However, economic growth does not always correlate with equity market growth, as seen in Spain and Italy during the 1980s and 1990s, and more recently in China.

Indian Energy Exchange: Do You Want to Earn a Royalty on India’s Economic Growth?

<ul><li>I recently came across a thought-provoking blog post by Andrew Walker on his YAVB discussing the possibility of a bubble forming in quality stocks.</li><li>Although Andrew acknowledged that the title might be seen as provocative, he raised valid concerns about the potential challenges of achieving satisfactory returns in the future by investing in quality-growth-at-a-reasonable-price stocks, given their lofty valuations.</li><li>As an example, he pointed to Costco, which is presently trading at a P/E ratio of 50 despite its long-term expected growth rate only slightly surpassing that of the US GDP.</li></ul>

I recently came across a thought-provoking blog post by Andrew Walker on his YAVB discussing the possibility of a bubble forming in quality stocks.Although Andrew acknowledged that the title might be seen as provocative, he raised valid concerns about the potential challenges of achieving satisfactory returns in the future by investing in quality-growth-at-a-reasonable-price stocks, given their lofty valuations.As an example, he pointed to Costco, which is presently trading at a P/E ratio of 50 despite its long-term expected growth rate only slightly surpassing that of the US GDP.

My approach is to cover companies that fit my investment criteria and trade at prices with near term free cashflow yields that provide above-average returns. Usually my hurdle yield is 10%. This way I do not need the market to converge to my assessment of value to earn acceptable returns. You can find my investment criteria on my website.

Since good companies rarely come cheap, I predominantly look off the beaten paths at smaller companies in sectors or regions that face short-term headwinds and are therefore neglected by most investors.
Most of the times, I use a Discounted Cashflow Model (DCF) to value businesses. However, to limit the possibilities to mess with the model, I developed a variation of the DCF that uses less parameters at the cost of being less precise. I think the tradeoff is very worthwhile as I really take the words of a Sir Maynard Keynes to heart: It is better to be roughly right than precisely wrong.

Lastly, to protect me from my own ignorance and stupidity, I always insist on a margin of safety.

Contrarian Cashflows
Fundamental Analyses
• Contrarian Cashflows

Portfolio Update: June 2024

There were no changes to the portfolio in June. The two major news among my holdings come from Norbit and Lindbergh. Norbit acquired Innomar...

Contrarian Cashflows

Solid State: Compounding Shareholder Capital in Industries with High Regulatory Barriers to Entry

Solid State (SOLI) is a British electronics manufacturer and distributor specializing in mission-critical components and systems for industries...

Contrarian Cashflows

Portfolio Update: May 2024

Welcome back to the portfolio updates series! I recently read Michael J. Mauboussin’s book, More Than You Know, which is full of practical...

Contrarian Cashflows

Indian Energy Exchange: Do You Want to Earn a Royalty on India’s Economic Growth?

As one of the fastest-growing economies globally, India is projected to become the third-largest economy, trailing only China and the US, by...

Contrarian Cashflows

Portfolio Update: April 2024

I recently came across a thought-provoking blog post by Andrew Walker on his YAVB discussing the possibility of a bubble forming in quality...

Contrarian Cashflows