The problem I have with the reporting of the company is that they fully consolidate bikeleasing (as if they owned 100% of the company) in their numbers. Even their adjusted EBITDA/EBIT is not adjusted for the minority owners. This is really misleading for investors as you have to dig deep into their reports to understand how much of the earnings is attributable to the shareholders.
I agree with the margin expansion, but not with the time horizon this will happen in. Especially with the land grab mode… that can take a long time… Good video though Andrew, I like the subsidiaries of Brockhaus a lot. The businesses seem great for climate change, energy ; increase in cybersecurity need (AI, digitalisation,..)
Is the time horizon a big concern if they are profitable and cash flowing during the land grab? My greater concern would be margin compression due to more competition popping up.
Interesting stock pick. I hope you didn't miss anything. I wish I could tell you something about the company, but I stopped investing in German stocks many, many years ago. I couldn't even tell you the names of all the 40 dax companies. But I am heavily biased, I don't like german CEOs and I don't like german investors. China (other reasons) and Germany are the only countries I would never buy stocks.
@@jakobrasmussen4214 in this conversation I count North Korea as a satellite of China and as long as there isn't a possibility of investing I don't need to think about it. That's my investor hat, I have a few more. 🍷😎
Hey Andrew great video as always. I have a quick question: Whilst I do understand the concept of fundamentally analysing a stock/company to assess its health and potential growth. What I dont seem to understand is the idea of fundamentally valuating a company based on DCF or PE ratios etc as opposed to using technical analysis to determine buy points for a particular stock? Because using fundamental valuation techniques seems largely subjective as opposed to using technical analysis to determine buy prices
Only using TA is gambling not investing. You have to understand how businesses make money (and more importantly lose money). You want to know when price is dropping but the fundamentals are improving and vice versa otherwise your just throwing darts
@@Ro22666 Well I did say that I understood why it is important to fundamentally analyse a company because its stock price is driven by its earnings & overall health. What I was referring to was that: why dont investors use technical analysis to better time their entry after fundamentally analysing a stock, instead of using DCF or PE ratios etc?
No strong opinion on this as I have no understanding of technical analysis. Essentially, i don't really care because my time horizon is 5 year+. Preferably 20 years+. I don't think technical analysis is going to help me.
@levi4660 I think I understand what your asking. Assuming your question is in the context of long term investing it’s impossible to time purchases. Imagine this - you did all the hard work to understand the business, did a valuation and some irrational fear causes the price to sell off and it hits your price with a sufficient margin of safety. Should you not buy if the fundamentals are solid just because it’s not at some imaginary support level? As a long term investor, remember you’re buying a business not the price. Price could absolutely fall another 20% just because but if you can’t stomach it, it’s better off index investing. Behavior is very often overlooked (not buying or selling emotionally) and no amount of research will teach you about your own behavior, you have to live through it. Hope that provided more color.
Thanks for your work, Andrew! I am paying the devil's advocate if it is ok. ;) 1) They work in the main financial City of Germany (Frankfurt), expensive office and prestige. I like it more humble. 2)The CEO shouldn't care about analysts estimations. He should care about the business, the price will follow. 3) Some Bullshit Numbers like you mentioned (FCF before tax. Etc.) Can you cover what the incentives and compensations telling you? (OLD Charlie, Incentives =Outcome)
Please, I welcome the devil's advocate. Frankfurt location - I have no idea whether that is by choice or by coincidence. But imagine if you have been living there for 20 years. I wouldn't move just because it's a bit more expensive. Tricky to judge on location. ANd the analysts are his internal analysts, not outside analysts. But Agree, he should just focus on per share growth and it'll take care of itself. I guess buybacks are important to understand the stock price though. 3) free cash flow before tax.. bleh Incentives - I believe it is super aligned, as the salary is capped and I think pretty reasonable. The large ownership by management is correct incentives to see a better share price. I think the incentives align nicely. Good questions :)
I would love to see a company like this copy the Constellation incentive model. ..Cash bonus that must be used to buy shares on the open market. When Andrew is named to the board, maybe he can push for that!
The problem I have with the reporting of the company is that they fully consolidate bikeleasing (as if they owned 100% of the company) in their numbers. Even their adjusted EBITDA/EBIT is not adjusted for the minority owners. This is really misleading for investors as you have to dig deep into their reports to understand how much of the earnings is attributable to the shareholders.
Correct, I guess they think that the NCI are still shareholders. But it is confusing I agree. Probably why the stock is where it is. I don't know
Great investment often begins in discomfort, mate! Great video and analysis! Look forward to more updates on Brockhaus.
appreciate it
I agree with the margin expansion, but not with the time horizon this will happen in. Especially with the land grab mode… that can take a long time…
Good video though Andrew, I like the subsidiaries of Brockhaus a lot. The businesses seem great for climate change, energy ; increase in cybersecurity need (AI, digitalisation,..)
Thanks, yeah timeframe is obviously a big unknown. cheers
Is the time horizon a big concern if they are profitable and cash flowing during the land grab? My greater concern would be margin compression due to more competition popping up.
Their ROIC is on average at 5%, what makes you think it's gonna increase?
margin expansion and growth
Interesting stock pick. I hope you didn't miss anything.
I wish I could tell you something about the company, but I stopped investing in German stocks many, many years ago. I couldn't even tell you the names of all the 40 dax companies.
But I am heavily biased, I don't like german CEOs and I don't like german investors. China (other reasons) and Germany are the only countries I would never buy stocks.
North Korea is an option?
let's see how it goes. And what do you see fundamentally wrong with the German business world?
@@jakobrasmussen4214 in this conversation I count North Korea as a satellite of China and as long as there isn't a possibility of investing I don't need to think about it. That's my investor hat, I have a few more. 🍷😎
Hey Andrew great video as always. I have a quick question: Whilst I do understand the concept of fundamentally analysing a stock/company to assess its health and potential growth. What I dont seem to understand is the idea of fundamentally valuating a company based on DCF or PE ratios etc as opposed to using technical analysis to determine buy points for a particular stock? Because using fundamental valuation techniques seems largely subjective as opposed to using technical analysis to determine buy prices
Only using TA is gambling not investing. You have to understand how businesses make money (and more importantly lose money). You want to know when price is dropping but the fundamentals are improving and vice versa otherwise your just throwing darts
@@Ro22666 Well I did say that I understood why it is important to fundamentally analyse a company because its stock price is driven by its earnings & overall health. What I was referring to was that: why dont investors use technical analysis to better time their entry after fundamentally analysing a stock, instead of using DCF or PE ratios etc?
No strong opinion on this as I have no understanding of technical analysis. Essentially, i don't really care because my time horizon is 5 year+. Preferably 20 years+. I don't think technical analysis is going to help me.
@levi4660 I think I understand what your asking. Assuming your question is in the context of long term investing it’s impossible to time purchases. Imagine this - you did all the hard work to understand the business, did a valuation and some irrational fear causes the price to sell off and it hits your price with a sufficient margin of safety. Should you not buy if the fundamentals are solid just because it’s not at some imaginary support level? As a long term investor, remember you’re buying a business not the price. Price could absolutely fall another 20% just because but if you can’t stomach it, it’s better off index investing. Behavior is very often overlooked (not buying or selling emotionally) and no amount of research will teach you about your own behavior, you have to live through it. Hope that provided more color.
Good video!
Thanks!
Thanks for your work, Andrew! I am paying the devil's advocate if it is ok. ;)
1) They work in the main financial City of Germany (Frankfurt), expensive office and prestige. I like it more humble.
2)The CEO shouldn't care about analysts estimations. He should care about the business, the price will follow.
3) Some Bullshit Numbers like you mentioned (FCF before tax. Etc.)
Can you cover what the incentives and compensations telling you? (OLD Charlie, Incentives =Outcome)
Please, I welcome the devil's advocate. Frankfurt location - I have no idea whether that is by choice or by coincidence. But imagine if you have been living there for 20 years. I wouldn't move just because it's a bit more expensive. Tricky to judge on location. ANd the analysts are his internal analysts, not outside analysts. But Agree, he should just focus on per share growth and it'll take care of itself. I guess buybacks are important to understand the stock price though.
3) free cash flow before tax.. bleh
Incentives - I believe it is super aligned, as the salary is capped and I think pretty reasonable. The large ownership by management is correct incentives to see a better share price. I think the incentives align nicely.
Good questions :)
I would love to see a company like this copy the Constellation incentive model. ..Cash bonus that must be used to buy shares on the open market. When Andrew is named to the board, maybe he can push for that!
@@mattdurette497 alright deal, i'f i'm ever on the board. That'll be the key thing haha
just let me know if alibaba becomes weak pls haha
I think keep holding for now. I'll update you if I think the thesis is broken :)