Element Global Value: 2014 Year End Letter

Element Global Value - Year End Letter 2014

Element Global Value: 3Q14 Report

Element Global Value - 3Q14

Element Global Value: 2Q14 Report

Below is the 2nd quarter 2014 report for the Element Global Value Portfolio

Element Global Value - 2Q14

Element Global Value: 1Q14 Report

Below is the 1st quarter 2014 report for the Element Global Value Portfolio

Element Global Value - 1Q14

Element Global Value: 4Q13 Report - 2013 Letter

Below is the 4th quarter 2013 report & 2013 letter for the Element Global Value Portfolio.

Element Global Value - 4Q13 (Year End Letter)

Element Global Value: 3Q13 Report

Below is the 3rd quarter 2013 report for the Element Global Value Portfolio

Element Global Value - 3Q13

During this quarter I completed the CFA (Chartered Financial Analyst) program and am now a CFA charterholder. The CFA designation is a rigorous, three year, three part test. It covers ethics, statistics, economics, futures and options, accounting, international accounting, and the stock and bond markets. The designation was proposed by Benjamin Graham, the father of value investing, to the New York Society in 1942. Balancing studying for the CFA, with a full time job, and managing this portfolio was one of the hardest things I have accomplished in my life. I would like to thank my family and friends for all the support they offered me.

Element Global Value: June 2013 Report

Below is the June 2013 report for the Element Global Value Portfolio

Element Global Value - June 2013

“The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage.” – Warren Buffett

Element Global Value: May 2013 Report

Below is the May 2013 report for the Element Global Value Portfolio.

Element Global Value - May 2013 by Filipe

Element Global Value: April 2013 Report

Below is the April 2013 report for the Element Global Value Portfolio.

Element Global Value - April 2013

Element Global Value: March 2013 Report

Below is the March 2013 report for the Element Global Value Portfolio.

Element Global Value - March 2013 by Filipe

No Sponge Left Behind: Patient Safety Technologies

One of the most common problems in a surgical procedure is the risk of an object being left inside the patient after the surgery is complete. Half of the times this happens, what is left behind is either a sponge or a towel. Patient Safety Technologies (PSTX) developed a simple, effective and affordable solution for this problem, and is set to reap the benefits of the increasing awareness and adoption of its system.

 

Element Global Value: February 2013 Report

Below is the February 2013 report for the Element Global Value Portfolio.

Element Global Value - February 2013

Element Global Value: January 2013 Report

Below is the January 2013 report for the Element Global Value Portfolio.

Element Global Value - January 2013 by

KazMunaiGas E&P: A True Bargain

Kazakhstan is a huge country that shares its borders with Russia on the North, China on the East and the Caspian Sea on the West. Despite its huge size, the country is home to only 17 million people and has a GDP of $200bn (lower than Portugal) or $12k per capita. Even so, the middle income nation has a per capita income similar to Turkey or Mexico. Supreme Chancellor Nazarbayev has been ruling the country for more than two decades and maintains strong popular support. He has been pushing Kazakhstan towards greater integration with the rest of the World.

The country was one of the last decade's hot emerging markets, with the equity market rising 26 fold between 2001 and 2007. Following the onslaught of the 2008 crisis, the four major banks were rescued and the stock market plunged by more than 75%. Now, five years later, the financial sector still faces challenges.

What caught my attention were the oil & gas reserves:  Kazakhstan is the World's 18th largest oil producer and has plenty of opportunity to grow production, as recoverable (proven) oil reserves stand at 5.5bn tons (9th on the World ranking). To put this into perspective, it would take the largest oil tanker ever built, the Norwegian Knock Nevis, about 10’000 trips to carry all the oil reserves.

Element Global Value - 2012 Letter

I have been managing a portfolio of stocks for two years. To keep track of my ideas, and most important to force myself to be disciplined I have been writing a monthly newsletter where I go over the change in the portfolio during the month, analyse new companies and assess my results.

I have been sending out these reports to friends & family, and have now decided to make them available to the general public. You will notice that the detail level increases substantially with time.

Below is the end of year letter for 2012. The letter is a bit long, but very interesting. It covers the various aspects of how I manage Element. In the report I also do a more detailed review of the largest positions in the portfolio, as well as the positions that have had a poor performance.

Element Global Value - Letter 2012 by

I hope you find the letter interesting and all feedback is appreciated.

Going forward I will post the monthly reports here. I have also made available past reports via my Scribd account. You can access them by clicking this link.

Canal+ : A Sheep in Wolf's Clothing

It’s now 6h45m a.m and my girlfriend woke me up about 40 minutes ago. She got back home from Turkey yesterday, and I just noticed that she had forgotten to adjust the clock for the 1 hour time difference. I’m not a morning person at all, but will try to make use of the extra time before work by starting a write-up on Canal+, a French media company with a very interesting structure.

Let’s get the complicated part out of the way. There are 3 separate Canal+ entities that must be distinguished before diving deeper into the valuation:

• Canal+ Group: owned 100% by Vivendi. Canal+ Group has an 80% stake in Canal+ France. It also has other assets such as Canal+ Régie (100%), Itélé (100%), Cyfra+ (75%) and StudioCanal (100%).
• Canal+ France: owned 80% by Vivendi and 20% by Lagardére. Canal+ France owns 48.5% of Canal+ SA. It also has other assets such as Canal+ Overseas (100%) and Canal+ Distribution (100%).
• Canal+ SA or Societe d'Edition de Canal Plus (C+ for simplification) is the company that I’m interested in. The company offers 6 exclusive channels: Canal+ channel, Canal+ Cinéma, Canal+ Sport, Canal+ Family, Canal+ Hi-Tech and Canal+ Décalé. More details further down.

Source: Societé d'Edition de Canal Plus 2011 Annual Report

Apple: My Largest Position

I have long been a fan of the Apple’s products. I have an iPhone 4 and before that an iPhone 3, I have old iPod Nano and Shuffle, and back in university I had an 11’’ Powerbook, which despite giving me a “cool” factor, turned out to be an awful experience. Besides this I’m thinking of buying an iMac and patiently awaiting the new iPhone. So you could say I’m a bit of an Apple junkie. These days it’s hard not to be …

Shame on Me!

This said, one of my big “misses” was not buying Apple shares when I first realized that headphones were magically turning white all around me. As if that wasn’t enough, I failed to see the obvious once I bought my first iPhone, and then again when I exchanged it for a new model. Instead of making my annual contribution to Apple’s investors I should have been one of them. Thankfully I came to my senses last year when I started building up a position in Apple shares.

Why I Own IBM

I received the hard copy of IBM’s 2011 annual report a few weeks ago but only got around to reading it today. I always enjoy reading the annual reports of companies I am already invested in. It gives me the opportunity to revise if the reasons why I bought shares are still valid, and if the company is still worthy of my investment.

Inception

I got the idea to invest in IBM (IBM:US) from Marvin Schwartz, the vice-chairman of Neuberger Berman, in the beginning of 2010. At the time I was working for a Portuguese asset management company, and I traveled, with one of my bosses and a Client, to Geneva to attend a conference set up by UBP. That was the first time I set foot in Geneva, who knew 3 or 4 months afterwards I would be moving there!

Anyway back to the story. At the conference, we listened to lots of presentations, mostly from fund managers. Usually these presentations are not very interesting because they all look the same: fund managers show you 10 to 15 slides with the structure of the company and investment process and on how they have an edge. After that you are usually shown one or two stocks the fund owns (that are working out well of course).

Avangard: You Need Eggs to Make an Omelete

Avangard (AVGR:LI) is an Ukrainian agro-industrial holding company, specialized in the production and distribution of shell eggs and egg products. The company is vertically integrated and owns and operates each of the key stages of the production cycle.

This little known company is the second largest egg producer in the world, with its flock of 25 million birds having produced 6 billion eggs in 2011. The largest egg producer in the world is the US based Cal-Maine Foods, which has a flock of 33 million birds and an annual production of almost 10 billion eggs.

Renault: Trading Considerably below SOTP

Renault (RNO:FP) is a French automaker that designs, produces and markets passenger cars and light commercial vehicles. What most people don't know is that Renault holds substantial stakes in Nissan, Volvo, Daimler and AvtoVaz. The company also owns 99% of Dacia and 80% of its JV with Samsung (Renault Samsung Motors).

Besides this the Company also owns RCI Banque, a financing arm that provides automotive financing for all three of Renault's brands.

The diagram below sums up Renault's stakes: