"The EU budget deficit was only 2% in 2008, but it is now expected to balloon to nearly 7% of gross domestic product for member economies as a whole in 2010. How can Europe repair its damaged public finances and still maintain its course for economic recovery?" (source: World Economic Forum)
Speakers: Lech Kaczynski, Yves Leterme, George A. Papandreou, Jose Luis Rodriguez Zapatero, Jean-Claude Trichet, Valdis Zatlers, Robin Niblett
"Switzerland has been criticized lately: On the one hand, Switzerland's direct democracy is a showpiece; on the other hand, it unleashes worldwide consternation. International pressures on bank secrecy lead to concessions in the exchange of fiscal information. The accusation of cherry-picking comes up regularly. Does Switzerland have to fear for its reputation and economy?" (source: World Economic Forum)
Speakers: Andre Schneider, Thomas Wipf, Pascale Bruderer-Wyss, Niall Ferguson, Peter Maurer, Haig Dr Simonian, Ulrich Thielemann, Stephan Klapproth
The Associated Press reported on January 10th:
Already the biggest auto market and steel maker, China edged past Germany in 2009 to become the top exporter, yet another sign of its rapid rise and the spread of economic power from West to East.
Total 2009 exports were more than $1.2 trillion, China's customs agency said Sunday. That was ahead of the 816 billion euros ($1.17 trillion) forecast for Germany by its foreign trade organization, BGA.
Perhaps the biggest surprise of this news to those who don't closely follow the rankings of the world's exporters may be the fact that China had not overtaken Germany much earlier. China's might as an export superpower has been writ large in the media for years, so much so that a relatively small nation such as Germany should have been left in the dust long ago. Yet, Germany's export strength has been known for decades, and the latest news simply serves as a reminder that there are export nations other than China that are also crucial to world trade. Japan, of course, is one such nation, as are some of the emerging Asian countries, such as Taiwan and Korea.
Norwegian Yara International is the #1 global producer of ammonia, nitrates and NPK. The company plays a critical role in food production for a growing world population.
If you did come across companies such as Yara, Mosaic, Agrium, and Potash, but never properly understood what they do or how wheat, rice and corn are linked to products such as Urea, DAP and MOP, the below link should also prove a helpful introductory guide.
Please click here for an 83-page fertilizer industry primer published by Yara in November 2009.
An exclusive interview with Professor Max Otte, one of the leading proponents of value investing in Europe's academic finance establishment, was published in a recent issue of Portfolio Manager's Review. The interview with Max Otte, Professor of Corporate Finance at the Fachhochschule Worms in Germany, sheds light on the peculiarities of investing in Europe and provides worthwhile advice for value-oriented investors. Excerpts:
The Manual of Ideas: You teach Bruce Greenwald´s Columbia University seminar on value investing in Europe. Are there examples of value investing theory that have to be “adjusted” in the context of investing in European stock markets? More specifically, are there any accounting or other pitfalls non-European investors should especially look out for?
Professor Max Otte: Europe simply is “more messy and complicated” — if you don’t have a truly global player, you really have to go country by country. That’s ten times the market research you do for a U.S. company. This is a reason why many U.S. investors don’t look here too much, which in my view is a big mistake. The legal system is as reliable as in the U.S. (fewer liability suits), and the business culture is generally one of more trust than in the U.S. The firms are generally more global than U.S. firms, which often tend to be run with a U.S.-centric approach.
As IAS/IFRS are taking hold, accounting is becoming very similar. However, in the German-speaking countries (Germany/Austria/Switzerland), we had the conservative principle of the lower value (cost or market) in financial account. This often understated income and assets and created hidden reserves. Some companies that do not need to fulfill the requirements of the major stock exchanges still cling to the old national standards, which I think were much superior in providing reliable minimum figures and stabilizing the economy. Again, those figures were not always “true and fair,” but much less subject to manipulation than, for example, GAAP.
Warren Buffett doesn’t like the idea that he has to disclose holdings over three percent in a public company in Germany once he starts buying.
MOI: Are there any countries in Europe that you find especially appealing? Perhaps individual sector or company opportunities that have arisen from local macroeconomic dislocation? Are there any European countries you find particularly unappealing?
Professor Otte: First, Europe as a whole is a rather tremendous place and as attractive as many emerging markets. Multiples are down and often lower than in the U.S., and revenue margins in European companies are generally lower than in the U.S. So many European companies have more fat to carry them through the crisis and can work on their margins.
Since I’m an active investor myself and my time is limited, I stick to what I know. I have a rather small universe of stocks. Over 80 percent of my holdings are in Europe right now, just 10 percent in the U.S., and the rest in Asia and gold.
My favorites are still German, Austrian and Swiss family-controlled “hidden champions” — often world market leaders in niche markets, often with very sound balance sheets, excellent growth prospects and long-term oriented management. Currently, you can buy many of these stocks at valuations as if they would never grow again. I presented three [ideas] at the Value Investing Seminar in Molfetta in 2007 – CTS Eventim, United Internet, and AWD – and investors who bought them below my recommended price would have broken even by the summer of 2009 despite the crisis. More of them: Grenke Leasing, Fielmann, Celesio, Takkt. Among large players, Nestlé looks very good, as do the pharmaceuticals.
Read the Portfolio Manager's Review interview with Professor Max Otte.
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Want to get live news alerts from UK companies in your email inbox? Looking for latest financials on German stocks? Confused about the share ownership of an Italian firm? No problem! After reading this article you should be equipped with some basic tools to help you navigate through various European countries in your quest for good investments. And the best part about it: Most of the resources we present here are absolutely FREE.
To start off, a user-friendly stock screening tool is available at Digital Look. Although sign-up is required, the screens are free to use. The site allows screening for stocks in eleven European countries, including the major markets of the U.K., Germany and France. Once a few companies are identified from the screen as potential targets, which country each company is domiciled in largely determines what resources are available for further research.
Unlike in the U.S. where investors can turn to the SEC’s website for company filings, there is no central filing database for all European companies. Filings are typically made with each country’s stock market regulator via publication on the relevant stock exchange.
Of course, individual company websites provide comprehensive information and are a good way to find out about latest announcements and download financial reports and presentations. Sometimes, however, share ownership information will not be displayed on the website and may be easier to find elsewhere. In the case of Italy, for example, ownership information is available at the central depository of the Italian securities market regulator CONSOB.
In terms of filings, European companies typically report on a semi-annual basis rather the quarterly basis that is commonplace in the U.S. There are exceptions, however, especially at the big-cap companies that also have listings in the U.S. Such companies may report on a quarterly basis. Also, many U.K.-based companies have started publishing so called "Interim Management Statements," which are a fancy word for earnings updates released between the semi-annual reports.
Lastly, it's worth pointing out that most companies publish annual reports in English as well as in their local language. Based on our research team's history of interaction with the investor relations departments of European companies, we have observed that European companies no longer regard the IR function as purely administrative. European IR representatives are in most cases knowledgeable about their companies' businesses, they are accessible to private investors and speak fluent English. As a result, you should not hesitate to use IR as a point of contact when doing fundamental research on a European company. If you do so, come equipped with some probing questions so that you are not simply listening to a company's "pitch."
The following list includes websites you may find helpful when researching European investment opportunities.
UK/Ireland
Investegate: Live provider of all announcements from UK quoted companies. Includes a free sign-up service to receive email alerts when new announcements are published.
London Stock Exchange: Provides downloadable reports with basic information on listed companies.
Hemscott: Provides basic information on 2,350 UK and Irish listed companies. Also has premium services available on a subscription basis.
Trustnet: Provides information on closed–end and open-end funds.
Takeover Panel: Official information on UK takeover bids and related regulations.
Companies House: Provides information on private UK companies. (nominal fees apply)
Germany
Frankfurt Stock Exchange: Provides basic information on listed companies.
Onvista: Provides basic information on German companies and related premium services. (in German)
Insiderdaten: Provides information on insider transactions for Germany companies. (in German)
Switzerland
Swiss Stock Exchange: Provides basic information on listed companies.
France/Holland/Belgium/Portugal
NYSE Euronext: Provides basic information on listed companies. Participating exchanges include Paris, Amsterdam, Brussels and Lisbon.
Sweden/Finland/Norway/Denmark/Iceland
Nasdaq OMX Nordic: Provides basic information on listed companies. Participating exchanges include Stockholm, Helsinki, Copenhagen and Iceland. Information on Norwegian companies listed on OMX is also available.
Italy
Italian Stock Exchange: Provides basic information on listed companies.
Consob: Provides information on share capital and major shareholders of Italian companies.
Spain
Madrid Stock Exchange: Provides basic information on listed companies.
CNMV: Provides information on Spanish companies including major shareholders.
Eastern Europe and Other Markets
Site-by-site: Provides links to official stock exchange and national bank websites in individual countries.
Nasdaq OMX Baltic: Provides basic information on listed companies in Estonia, Latvia and Lithuania including financial reports.
Other
Digital Look: Provides a stock screening tool for selected European countries. (free sign-up required)
Renaissance Capital: Provides information on foreign IPOs listed on U.S. markets. Service allows search by foreign country.
European Value Report: Idea-oriented research publication of The Manual of Ideas, featuring two European stock picks per month
There is no better way of learning a new language than by going to the country where it's spoken. Similarly, if you are looking to expand your horizons and learn about European investment opportunities, there is no better way than by tackling as many European company annual reports as you can muster.
You will not only learn about individual companies, some of which may be global competitors to U.S. companies in which you may already have an investment, but you will also start learning the accounting language "spoken" by European companies. Rather than read a dry textbook on the differences between U.S. and European accounting standards, you can ease into those differences by reading annual reports.
The following links will take you to a FREE service that provides annual reports, in electronic and print format, for many companies trading on stock exchanges in Europe. Grouping your company reading list by stock exchange may be useful, as you'll be able to navigate the European investment landscape by major region or country.
AIM (London; smaller companies) | Bovespa | Dublin | Euronext Amsterdam | Euronext Brussels | Euronext Lisbon | Euronext Paris | Frankfurt | ISEQ (Irish) | Italy | Lisbon | London | Milan | NASDAQ EUROPE | OMX Copenhagen | OMX Helsinki | OMX Iceland | OMX Stockholm | Oslo | Oslo Bors | PLUS (London; small and mid cap companies) | Prague | Vienna | Warsaw | Zurich
An even better way to structure your tour of the European investment landscape may be by industry:
Aerospace & Defence | Agriculture, Paper & Packaging | Automotive | Banks, Financial Services & Insurance | Biotechnology | Building & Construction | Business & Support Services | Chemicals | Closed End Funds & Investment Companies | Computers, Technology & Internet | Consumer & Retail Products | Electronics & Engineering | Food Manufacturing & Products | Healthcare & Pharmaceutical | Industrial & Manufacturing | Leisure & Entertainment | Metals & Mining | Oil, Gas & Energy | Publishing & Media | Real Estate | Telecommunications | Transportation | Utilities
Or you can simply go through one list of all European companies for which free annual reports are available. Several companies on the list are well-known corporations that are worth reading about regardless of your interest in Europe in particular. These companies include: Agfa-Gevaert | AstraZeneca | British American Tobacco | Christian Dior | Deutsche Bank | Euro Disney | J Sainsbury | London Stock Exchange | Old Mutual | Park Plaza Hotels | Raiffeisen International Bank | Royal Dutch Shell | WPP Group
Join European Value Report as the acclaimed research team of The Manual of Ideas uncovers the best European investments each month.
In a Q2 letter to investors, dated July 13th, respected value investor David Einhorn of Greenlight Capital states that at the end of the second quarter, "the five largest disclosed long positions in the [Greenlight] Partnerships are Arkema, Criteria Caixa, Ford Motor Company debt, gold, and Pfizer."
Einhorn has owned French chemicals company Arkema (Paris: AKE) and Spanish investment group Criteria Caixa (Madrid: CRI) for some time. Greenlight has also owned other Europe-domiciled companies in the past, including French auto maker Renault and Austrian Post, which was named a top monthly stock pick in the recent issue of European Value Report.
While it is impossible to divine Einhorn's strong interest in European equities, we note the following attractive investment attributes offered by many European markets:
Here is a quick overview of the top two European holdings of Greenlight:
Criteria Caixa is an investment group with holdings in financial and industrial companies. The company’s core shareholder is “la Caixa”; it has been listed on the continuous market of the Spanish stock exchange since October 2007. Criteria has a firm commitment to international growth, active management of its portfolio within a framework of controlled risk, and boosting the growth, development and returns of the companies it invests in. Criteria CaixaCorp holds the largest corporate investment portfolio in Spain by net asset volume with a value of €14,823 million at June 30, 2009. [view investor presentation] [read annual report]
(click to enlarge)
Arkema is a global chemical company and France’s leading chemicals producer that operates in three businesses: Vinyl Products, Industrial Chemicals, and Performance Products. Arkema reported revenue of 5.6 billion euros in its most recent fiscal year. The company has 15,000 employees in over 40 countries and six research centers located in France, the United States and Japan. With internationally recognized brands, Arkema holds leadership positions in its principal markets. [view investor presentation] [annual report]
Disclosure: No positions.
European Value Report, the newly launched monthly investment publication of The Manual of Ideas, has named Bloomsbury Publishing (London: BMY) as one of the Report's top two stock picks for the month of October. European Value Report seeks to uncover compelling investments across Europe. The Report benefits from an on-the-ground presence in London, and the research team includes analysts fluent in languages spoken in several European countries. Analysts responsible for identifying European investments frequently travel the continent to find new ideas.Read European Value Report's thesis on Bloomsbury Publishing.
Disclosure: No positions.
European Value Report, the newly launched monthly investment publication of The Manual of Ideas, has named Austrian Post (Oesterreichische Post) (Vienna: POST) (Yahoo: POST.VI) as one of the Report's top two stock picks for the month of October.
European Value Report seeks to uncover compelling investments across the European continent. The Report benefits from an on-the-ground presence in London, and the research team includes analysts fluent in languages spoken in several European countries. Analysts responsible for identifying European investment ideas frequently travel the continent to uncover new opportunities.
Read European Value Report's thesis on Austrian Post.
Disclosure: No positions.
We are pleased to present the inaugural issue of European Value Report, a new publication of The Manual of Ideas. Each month, European Value Report will bring subscribers the top two investment ideas in Europe, as selected by our acclaimed research team.
Special offer: Subscribe by October 19th and take $100 OFF the annual rate of $299. If you are an existing Manual of Ideas paid subscriber, take another $100 OFF for total savings of $200 per year.
Respected value investor Aaron Edelheit of Sabre Value Management posted the following comment on investing in Russia on his blog recently:
"Ikea said Tuesday that it was suspending further investment in Russia, apparently because of pervasive corruption and demands for bribes."
"The announcement came after a rare statement by Ikea's 83-year-old founder in a radio interview that Ikea had decided not to solve problems by slipping money under the table."
"Kudos to Ikea for standing up and going public with how corrupt Russia is, but they should not be surprised, and they should have known better than invest money and time in Russia. Russia is run mafia style and people on the inside and who live there can easily tell you that there is little difference between the Russian mafia and the Russian government. I refuse to invest one penny in that country and this article is yet another reason to stay far away from its corrupt ways."