𝐓𝐡𝐞 𝐒𝐰𝐚𝐭𝐜𝐡 𝐆𝐫𝐨𝐮𝐩 𝟐𝟎𝟐𝟐

This post is about the Swatch company, and more importantly, how you can make your own 𝐀𝐤𝐭𝐢𝐨𝐧ä𝐫𝐬𝐮𝐡𝐫 𝐞𝐫𝐡𝐚𝐥𝐭𝐞𝐧 in the future.

Everything that makes sense without tables you can read directly here. You can find my graphics and tables here:

https://www.valueinvestments.ch/the-swatch-group-ag-sachdividende-2022

The Swatch Group is an internationally known company and also fits perfectly into the 𝐒𝐞𝐫𝐢𝐞 ü𝐛𝐞𝐫 𝐒𝐚𝐜𝐡𝐝𝐢𝐯𝐢𝐝𝐞𝐧𝐝𝐞𝐧. Because the shareholders of The Swatch Group Ltd will receive 𝐣𝐞𝐝𝐞𝐬 𝐉𝐚𝐡𝐫 𝐞𝐢𝐧𝐞 𝐔𝐡𝐫! Of course, this is not a watch of the caliber of 𝐎𝐦𝐞𝐠𝐚 - the drawing card among the brands of the Swatch Group. But still, the watch is a nice gesture, which shareholders can look forward to.

As in the previous posts on Jungfraubahn Holding AG, CALIDA AG and Bell Food Group AG, I will introduce you to the company a bit. Also 𝐚𝐮𝐬𝐠𝐞𝐰ä𝐡𝐥𝐭𝐞 𝐅𝐢𝐧𝐚𝐧𝐳𝐤𝐞𝐧𝐧𝐳𝐚𝐡𝐥𝐞𝐧 I do not want to withhold from you - just as I do in the 𝐕𝐞𝐫𝐦ö𝐠𝐞𝐧𝐬𝐯𝐞𝐫𝐰𝐚𝐥𝐭𝐮𝐧𝐠 before I invest in a company.

𝐃𝐚𝐬 𝐌𝐚𝐫𝐤𝐞𝐧𝐮𝐧𝐢𝐯𝐞𝐫𝐬𝐮𝐦 𝐝𝐞𝐫 𝐒𝐰𝐚𝐭𝐜𝐡 𝐆𝐫𝐨𝐮𝐩

The Swatch brand is one of the 𝐛𝐞𝐤𝐚𝐧𝐧𝐭𝐞𝐬𝐭𝐞𝐧 𝐔𝐡𝐫𝐞𝐧𝐦𝐚𝐫𝐤𝐞𝐧 𝐝𝐞𝐫 𝐒𝐜𝐡𝐰𝐞𝐢𝐳 along with Rolex. Less well known, however, is the entire watch 𝐔𝐧𝐢𝐯𝐞𝐫𝐬𝐮𝐦 that the Swatch Group unites under itself.

The three 𝐮𝐦𝐬𝐚𝐭𝐳𝐬𝐭ä𝐫𝐤𝐬𝐭𝐞𝐧 𝐌𝐚𝐫𝐤𝐞𝐧 of Swatch Group for 2021 were:

-> 𝐎𝐦𝐞𝐠𝐚: 2.2 billion Swiss francs - No. 3 after Rolex (1) and Cartier (2).

-> 𝐋𝐨𝐧𝐠𝐢𝐧𝐞𝐬: 1.5 billion Swiss francs - the No. 5 after Audemars Piguet (4)

-> 𝐓𝐈𝐒𝐒𝐎𝐓: 1 billion Swiss francs - the No. 8 after Patek Philippe (6) and Richard Mille (7).

As Swatch Group does not publish sales per brand, the figures are based on estimates from studies by Morgan Stanley and the consulting firm LuxeConsult.

The 𝐔𝐦𝐬𝐚𝐭𝐳 of the entire Swatch Group can of course be found in the annual report. In 2021, The Swatch Group could generate net sales of 𝟕.𝟑 𝐌𝐢𝐥𝐥𝐢𝐚𝐫𝐝𝐞𝐧 𝐒𝐜𝐡𝐰𝐞𝐢𝐳𝐞𝐫𝐟𝐫𝐚𝐧𝐤𝐞𝐧.

𝐃𝐢𝐞 𝐀𝐤𝐭𝐢𝐞𝐧 𝐝𝐞𝐫 𝐒𝐰𝐚𝐭𝐜𝐡 𝐆𝐫𝐮𝐩𝐩𝐞

Swatch Group shares 𝐬𝐭ü𝐫𝐳𝐭𝐞𝐧 𝐀𝐧𝐟𝐚𝐧𝐠 𝟐𝟎𝟐𝟎 𝐢𝐧 𝐝𝐞𝐧 𝐊𝐞𝐥𝐥𝐞𝐫 also. On January 17, 2020, Swatch registered shares (ISIN CH0012255144) were still trading on the stock exchange for 51.80 Swiss francs. Two months later, on March 16, 2020, Swatch registered shares were trading for only 𝐥ä𝐩𝐩𝐢𝐬𝐜𝐡𝐞 𝟑𝟏.𝟏𝟎 𝐒𝐜𝐡𝐰𝐞𝐢𝐳𝐞𝐫𝐟𝐫𝐚𝐧𝐤𝐞𝐧. A proud 40% less than in mid-January. Swatch shares then set off on a 𝐛𝐞𝐞𝐢𝐧𝐝𝐫𝐮𝐜𝐤𝐞𝐧𝐝𝐞𝐧 𝐄𝐫𝐡𝐨𝐥𝐮𝐧𝐠. At the 𝐇𝐨𝐜𝐡 on June 8, 2021, the closing price was an astonishing 𝟔𝟒.𝟏𝟎 𝐒𝐜𝐡𝐰𝐞𝐢𝐳𝐞𝐫𝐟𝐫𝐚𝐧𝐤𝐞𝐧 - that is, 𝐮𝐧𝐠𝐥𝐚𝐮𝐛𝐥𝐢𝐜𝐡𝐞 𝟏𝟎𝟔 % above the March 2020 low.

However, the recovery did not last long. In 2022, the share price of Swatch shares fell significantly again. Today it stands at around 45 Swiss francs. In the last two years from the beginning of 2020 to the beginning of 2022, the Swatch share was hardly able to recover and instead strained the nerves of shareholders to the utmost. Compared to the last peak price of 64.10 Swiss francs, it is now 𝐫𝐮𝐧𝐝 𝟑𝟎 % 𝐠ü𝐧𝐬𝐭𝐢𝐠𝐞𝐫 𝐠𝐞𝐡𝐚𝐧𝐝𝐞𝐥𝐭. Swatch shares have always been highly cyclical and high price fluctuations are simply a part of life for Swatch Group shareholders. One should do as the 𝐅𝐚𝐦𝐢𝐥𝐢𝐞 𝐇𝐚𝐲𝐞𝐤 - which holds a large part of the shares - and not worry too much about the 𝐋𝐚𝐮𝐧𝐞𝐧 𝐝𝐞𝐫 𝐁ö𝐫𝐬𝐞 if one holds Swatch shares for the long term.

As an asset manager with a 𝐕𝐚𝐥𝐮𝐞- & 𝐌𝐨𝐦𝐞𝐧𝐭𝐮𝐦-𝐒𝐭𝐫𝐚𝐭𝐞𝐠𝐢𝐞, I try to buy companies 𝐠ü𝐧𝐬𝐭𝐢𝐠 that have a 𝐡𝐨𝐡𝐞𝐬 𝐏𝐫𝐞𝐢𝐬𝐦𝐨𝐦𝐞𝐧𝐭𝐮𝐦. Swatch has become quite a bit cheaper, but the momentum is currently still going in an unsound direction - so it needs 𝐍𝐞𝐫𝐯𝐞𝐧 𝐰𝐢𝐞 𝐃𝐫𝐚𝐡𝐭𝐬𝐞𝐢𝐥𝐞 here.

In the 𝐧ä𝐜𝐡𝐬𝐭𝐞𝐧 𝐀𝐛𝐬𝐜𝐡𝐧𝐢𝐭𝐭, I come to talk about Swatch's 𝐀𝐤𝐭𝐢𝐨𝐧ä𝐫𝐬𝐮𝐡𝐫 and how I fared with Swatch Group's stock.

𝐀𝐤𝐭𝐢𝐞𝐧, 𝐃𝐢𝐯𝐢𝐝𝐞𝐧𝐝𝐞𝐧 & 𝐙𝐞𝐢𝐭𝐦𝐞𝐬𝐬𝐞𝐫

My 𝐀𝐜𝐡𝐭𝐞𝐫𝐛𝐚𝐡𝐧𝐟𝐚𝐡𝐫𝐭 with Swatch name share started about 2 years ago on August 31, 2020, I 𝐛𝐞𝐳𝐚𝐡𝐥𝐭𝐞 𝟑𝟓.𝟔𝟒 𝐒𝐜𝐡𝐰𝐞𝐢𝐳𝐞𝐫𝐟𝐫𝐚𝐧𝐤𝐞𝐧 - that is, already 14.60% more than one would have paid at the lowest price in March 2020. In hindsight, I still had some 𝐆𝐥ü𝐜𝐤 with the entry price until now: it could have been some 𝐬𝐜𝐡𝐥𝐢𝐦𝐦𝐞𝐫 𝐮𝐧𝐝 𝐭𝐞𝐮𝐫𝐞𝐫 - if I had entered at the high of 64.10 Swiss francs. Plus, I would not have received the shareholder clock in May 2021 - it would have been a 𝐃𝐞𝐬𝐚𝐬𝐭𝐞𝐫 𝐚𝐮𝐟 𝐠𝐚𝐧𝐳𝐞𝐫 𝐋𝐢𝐧𝐢𝐞.

𝐙𝐮𝐦 𝐆𝐥ü𝐜𝐤 𝐤𝐚𝐦 𝐚𝐥𝐥𝐞𝐬 𝐚𝐧𝐝𝐞𝐫𝐬: So I paid the 35.64 Swiss francs in August 2020 and received the 𝐡𝐞𝐢𝐬𝐬 𝐛𝐞𝐠𝐞𝐡𝐫𝐭𝐞 𝐀𝐤𝐭𝐢𝐨𝐧ä𝐫𝐬𝐮𝐡𝐫 in 2021 and 2022. Now I asked myself what the watch could bring in cash besides the sentimental value? That's not easy to quantify - 𝐯𝐞𝐫𝐠𝐥𝐞𝐢𝐜𝐡𝐛𝐚𝐫𝐞 𝐒𝐰𝐚𝐭𝐜𝐡 𝐔𝐡𝐫𝐞𝐧 can be bought for over 100,- Swiss francs. But for this price I will never get the watch sold myself. More realistic here are comparable offers on auction platforms - there it is usually offered between 30.- and 60.- Swiss francs. 𝟑𝟎.- 𝐒𝐜𝐡𝐰𝐞𝐢𝐳𝐞𝐫𝐟𝐫𝐚𝐧𝐤𝐞𝐧 seems to be a realizable value to me and that's why I have included it in the table of my milk book calculation below.

𝐙𝐮𝐬ä𝐭𝐳𝐥𝐢𝐜𝐡 to shareholder watches were paid out in both 2021 and 2022 𝐃𝐢𝐯𝐢𝐝𝐞𝐧𝐝𝐞𝐧 of CHF 0.70 and 1.10 Swiss francs per share. This was despite difficult business conditions due to Corona, war and sanctions in important sales markets of Swatch.

Unlike CALIDA - where you only get your pajamas if you buy 20 shares - Swatch 𝐧𝐮𝐫 𝐞𝐢𝐧𝐞 𝐞𝐢𝐧𝐳𝐢𝐠𝐞 𝐍𝐚𝐦𝐞𝐧𝐚𝐤𝐭𝐢𝐞 or a bearer share is required. But the bearer share is almost 5.5 times more expensive and it is more troublesome to get the watch: You can't just register in a name register, you have to send a holding confirmation from the custodian bank to Swatch. In return, the dividend is of course 5.5 times higher.

𝐓𝐢𝐩𝐩𝐬, 𝐰𝐢𝐞 𝐢𝐡𝐫 𝐚𝐦 𝐞𝐢𝐧𝐟𝐚𝐜𝐡𝐬𝐭𝐞𝐧 𝐳𝐮𝐫 𝐀𝐤𝐭𝐢𝐨𝐧ä𝐫𝐬𝐮𝐡𝐫 𝐯𝐨𝐧 𝐒𝐰𝐚𝐭𝐜𝐡 𝐤𝐨𝐦𝐦𝐭:

𝟏. 𝐒𝐰𝐚𝐭𝐜𝐡 𝐍𝐚𝐦𝐞𝐧𝐚𝐤𝐭𝐢𝐞𝐧 𝐤𝐚𝐮𝐟𝐞𝐧: Swatch Group shares are traded on the Swiss Stock Exchange. ATTENTION - there are registered shares (UHRN) and bearer shares (UHR). You can find the registered shares under ISIN: CH0012255144 - currently one registered share costs around 42 Swiss Francs.

𝟐. 𝐈𝐧𝐬 𝐍𝐚𝐦𝐞𝐧𝐫𝐞𝐠𝐢𝐬𝐭𝐞𝐫 𝐞𝐢𝐧𝐭𝐫𝐚𝐠𝐞𝐧 𝐥𝐚𝐬𝐬𝐞𝐧: In order for Swatch to know that you are the owner of the shares, have yourself entered in the name register - this way you will automatically receive the documents for written or electronic representation. How this is done varies from bank to bank: there is often a function that allows you to register directly in e-banking. It is best to ask your bank or broker directly.

𝟑. 𝐕𝐞𝐫𝐭𝐫𝐞𝐭𝐮𝐧𝐠𝐬𝐯𝐨𝐥𝐥𝐦𝐚𝐜𝐡𝐭 𝐮𝐧𝐝 𝐖𝐞𝐢𝐬𝐮𝐧𝐠𝐬𝐞𝐫𝐭𝐞𝐢𝐥𝐮𝐧𝐠: Usually in May you will receive a letter from the Swatch Group. There you can give your proxy and instructions to the independent proxy. If you have done this and sent it back to the Swatch Group, you will receive the shareholder gift after the General Meeting.

𝐀𝐮𝐬𝐠𝐞𝐰ä𝐡𝐥𝐭𝐞 𝐊𝐞𝐧𝐧𝐳𝐚𝐡𝐥𝐞𝐧 - 𝐓𝐡𝐞 𝐒𝐰𝐚𝐭𝐜𝐡 𝐆𝐫𝐨𝐮𝐩

As an asset manager, I always look at a company's 𝐅𝐢𝐧𝐚𝐧𝐳𝐤𝐞𝐧𝐧𝐳𝐚𝐡𝐥𝐞𝐧. It is best to analyze a company from different angles. First, there is the 𝐪𝐮𝐚𝐥𝐢𝐭𝐚𝐭𝐢𝐯𝐞 and second, there is also the 𝐪𝐮𝐚𝐧𝐭𝐢𝐭𝐚𝐭𝐢𝐯𝐞 𝐀𝐧𝐚𝐥𝐲𝐬𝐞. In the next part, I will mainly go into the quantitative side and have some key figures of Swatch Group for you 𝐚𝐮𝐟𝐛𝐞𝐫𝐞𝐢𝐭𝐞𝐭. In my daily work as an asset manager, I work with exactly these metrics for my 𝐕𝐚𝐥𝐮𝐞- 𝐮𝐧𝐝 𝐌𝐨𝐦𝐞𝐧𝐭𝐮𝐦 𝐒𝐭𝐫𝐚𝐭𝐞𝐠𝐢𝐞. They are a good starting point - even though there are many other factors that go into the analyses:

The 𝐒𝐰𝐚𝐭𝐜𝐡 𝐆𝐫𝐨𝐮𝐩 𝐀𝐆 is 𝐟𝐚𝐢𝐫 𝐛𝐞𝐰𝐞𝐫𝐭𝐞𝐭 or even slightly undervalued at the moment. In terms of 𝐏𝐫𝐨𝐟𝐢𝐭𝐚𝐛𝐢𝐥𝐢𝐭ä𝐭 and 𝐄𝐟𝐟𝐢𝐳𝐢𝐞𝐧𝐳 performance, Swatch was able to improve compared to the previous year.

At first glance, it looks like Swatch has two 𝐏𝐫𝐨𝐛𝐥𝐞𝐦𝐞 𝐛𝐞𝐢 𝐢𝐡𝐫𝐞𝐫 𝐅𝐢𝐧𝐚𝐧𝐳𝐢𝐞𝐫𝐮𝐧𝐠:

The 𝐀𝐧𝐳𝐚𝐡𝐥 𝐀𝐤𝐭𝐢𝐞𝐧 has 𝐞𝐫𝐡ö𝐡𝐭 - reducing the share of profits for existing shareholders.

The 𝐋𝐢𝐪𝐮𝐢𝐝𝐢𝐭ä𝐭𝐬𝐠𝐫𝐚𝐝 𝟑 got worse - which worsens the ability to pay.

𝐀𝐁𝐄𝐑:

Both fall here 𝐤𝐚𝐮𝐦 𝐢𝐧𝐬 𝐆𝐞𝐰𝐢𝐜𝐡𝐭. Whether the number of shares is 257.58 (2020) or 258.97 (2021) makes little difference to individual investors.

When it comes to the liquidity ratio, the 𝐊𝐫𝐢𝐭𝐢𝐤 𝐧𝐨𝐜𝐡 𝐯𝐢𝐞𝐥 𝐰𝐞𝐧𝐢𝐠𝐞𝐫 𝐚𝐧𝐠𝐞𝐛𝐫𝐚𝐜𝐡𝐭: A liquidity ratio 3 of 𝟕.𝟑𝟒 𝐢𝐬𝐭 𝐦𝐞𝐡𝐫 𝐚𝐥𝐬 𝐠𝐞𝐧𝐮𝐠! Because that means nothing other than Swatch is in the fortunate position of having 7.34 times more current assets than current liabilities. This is so good that it is almost inefficient in the other direction, because cash alone does not bring a return - 𝐒𝐰𝐚𝐭𝐜𝐡 𝐬𝐜𝐡𝐰𝐢𝐦𝐦𝐭 𝐬𝐨𝐳𝐮𝐬𝐚𝐠𝐞𝐧 𝐢𝐧 𝐋𝐢𝐪𝐮𝐢𝐝𝐢𝐭ä𝐭. This is certainly due to the 𝐖𝐞𝐫𝐭𝐞𝐧 𝐝𝐞𝐫 𝐇𝐚𝐲𝐞𝐤-𝐅𝐚𝐦𝐢𝐥𝐢𝐞: Even father Nicolas Hayek liked 𝐧𝐢𝐜𝐡𝐭 to be 𝐯𝐨𝐧 𝐝𝐞𝐫 𝐆𝐧𝐚𝐝𝐞 𝐝𝐞𝐫 𝐁𝐚𝐧𝐤𝐞𝐧 𝐚𝐛𝐡ä𝐧𝐠𝐢𝐠. His son Nick Hayek and CEO of Swatch is in no way inferior.

So 𝐤𝐚𝐧𝐧 𝐓𝐡𝐞 𝐒𝐰𝐚𝐭𝐜𝐡 𝐆𝐫𝐨𝐮𝐩 𝐀𝐆 with their numbers quite ü𝐛𝐞𝐫𝐳𝐞𝐮𝐠𝐞𝐧.

𝐕𝐚𝐥𝐮𝐞 𝐂𝐨𝐦𝐩𝐨𝐬𝐢𝐭𝐞

Swatch Group AG has a Value Composite of 20, which means that the company is 𝐭𝐢𝐞𝐟 𝐛𝐞𝐰𝐞𝐫𝐭𝐞𝐭 from this perspective. A 𝐧𝐞𝐠𝐚𝐭𝐢𝐯𝐞𝐫 𝐏𝐮𝐧𝐤𝐭 is that the 𝐅𝐫𝐞𝐢𝐞 𝐂𝐚𝐬𝐡𝐟𝐥𝐨𝐰 decreased by 8.94% last year. Revenue before interest and taxes (𝐄𝐁𝐈𝐓) 𝐬𝐚𝐧𝐤𝐞𝐧 has also 𝐮𝐦 𝟏𝟏𝟒.𝟐𝟐 % over the last five years, but recovered by 𝟒𝟑.𝟗𝟐 % 𝐠𝐞𝐬𝐭𝐞𝐢𝐠𝐞𝐫𝐭 last year.

𝐏𝐢𝐨𝐭𝐫𝐨𝐬𝐤𝐢 𝐅-𝐒𝐜𝐨𝐫𝐞

The Swatch Group AG has a 𝐅-𝐒𝐜𝐨𝐫𝐞 𝐯𝐨𝐧 𝟕. The two point deductions are very severe and almost absurd especially at the liquidity ratio 3 of 7.34. Thus, 𝐚𝐮𝐬 𝐦𝐞𝐢𝐧𝐞𝐫 𝐒𝐢𝐜𝐡𝐭 is the 𝐅-𝐒𝐜𝐨𝐫𝐞 𝐞𝐡𝐞𝐫 𝐛𝐞𝐢 𝟖 𝐨𝐝𝐞𝐫 𝐬𝐨𝐠𝐚𝐫 𝟗 - which is the maximum score. This is a 𝐬𝐞𝐡𝐫 𝐠𝐮𝐭𝐞𝐫 𝐖𝐞𝐫𝐭 that indicates a solid 𝐏𝐫𝐨𝐟𝐢𝐭𝐚𝐛𝐢𝐥𝐢𝐭ä𝐭, 𝐄𝐟𝐟𝐢𝐳𝐢𝐞𝐧𝐳 and 𝐅𝐢𝐧𝐧𝐚𝐳𝐢𝐞𝐫𝐮𝐧𝐠. Especially when considering the research of Professor Joseph D. Piotroski: After all, companies that scored the highest 8 or 9 were able to achieve an average Ü𝐛𝐞𝐫𝐫𝐞𝐧𝐝𝐢𝐭𝐞 𝐯𝐨𝐧 𝟏𝟑.𝟒 % over the market during the 20-year period from 1976 to 1996. However, here I would like to put my word of warning again: NOT every company with an F-Score of 8 or 9 achieves such a return! Some are well above it, some may be close to it, and still others well below it. Such studies usually take into account a diversified portfolio of securities. So simply buying one such stock doesn't work. In my own investments and especially as an asset manager, I make sure to keep a close eye on so-called single stock risks.

𝐖𝐚𝐫𝐮𝐦 𝐚𝐮𝐬𝐠𝐞𝐫𝐞𝐜𝐡𝐧𝐞𝐭 𝐝𝐢𝐞𝐬𝐞 𝐕𝐚𝐥𝐮𝐞-𝐊𝐞𝐧𝐧𝐳𝐚𝐡𝐥𝐞𝐧?

The basic tenets of value investing are somewhat clear: value investors seek out undervalued companies to invest in. This often involves quantitative and qualitative analysis. However, when it comes to actual implementation, there are a variety of approaches. I find it 𝐠𝐞𝐟ä𝐡𝐫𝐥𝐢𝐜𝐡 to focus on one ratio, such as price-to-earnings or price-to-book, and make the investment decision dependent only on these quantitative factors of company valuation. Here, it seems to me that the 𝐊𝐨𝐦𝐛𝐢𝐧𝐚𝐭𝐢𝐨𝐧 𝐯𝐨𝐧 𝐁𝐞𝐰𝐞𝐫𝐭𝐮𝐧𝐠𝐬𝐤𝐞𝐧𝐧𝐳𝐚𝐡𝐥𝐞𝐧 𝐬𝐢𝐧𝐧𝐯𝐨𝐥𝐥 - such as O'Shaugnessy's Value Composite. Such long-term studies are worth their weight in gold, in my opinion, and are also meaningful. He analyzed a wide variety of value metrics over 45 years, from January 1, 1964 to December 31, 2009, to figure out which value metrics to use to select companies for the best returns. This resulted in the so-called Value Composite, which is a combination of these value metrics. He tested this combined valuation ranking for all rolling 10-year periods over the 45-year period between 1964 and 2009. He found that it performed 𝐢𝐧 𝟖𝟐 % 𝐝𝐞𝐫 𝐅ä𝐥𝐥𝐞 𝐛𝐞𝐬𝐬𝐞𝐫 than companies that were undervalued based on a single valuation metric - but just not when the other valuation metrics were also looked at.

𝐖𝐞𝐬𝐡𝐚𝐥𝐛 𝐝𝐞𝐫 𝐏𝐢𝐨𝐭𝐫𝐨𝐬𝐤𝐢 𝐅-𝐒𝐜𝐨𝐫𝐞?

The Piotroski F-Score provides an initial assessment of the 𝐏𝐫𝐨𝐟𝐢𝐭𝐚𝐛𝐢𝐥𝐢𝐭ä𝐭, 𝐅𝐢𝐧𝐚𝐧𝐳𝐢𝐞𝐫𝐮𝐧𝐠, and 𝐄𝐟𝐟𝐢𝐳𝐢𝐞𝐧𝐳 of a company. It can be traced back to Joseph D. Piotroski, a professor of accounting. In 2000, he wrote a research paper titled "Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers." His findings ü𝐛𝐞𝐫𝐭𝐫𝐚𝐟𝐞𝐧 his 𝐨𝐩𝐭𝐢𝐦𝐢𝐬𝐭𝐢𝐬𝐜𝐡𝐬𝐭𝐞𝐧 𝐄𝐫𝐰𝐚𝐫𝐭𝐮𝐧𝐠𝐞𝐧:

Buying companies that scored the highest 8 or 9 on his nine-point scale, or F-score, as he called it, resulted in an average Ü𝐛𝐞𝐫𝐫𝐞𝐧𝐝𝐢𝐭𝐞 𝐯𝐨𝐧 𝟏𝟑.𝟒 % over the market during the 20-year period from 1976 to 1996.

𝐖ü𝐫𝐝𝐞 𝐢𝐜𝐡 𝐝𝐢𝐞 𝐀𝐤𝐭𝐢𝐞 𝐯𝐨𝐧 𝐓𝐡𝐞 𝐒𝐰𝐚𝐭𝐜𝐡 𝐆𝐫𝐨𝐮𝐩 𝐡𝐞𝐮𝐭𝐞 𝐤𝐚𝐮𝐟𝐞𝐧?

Swatch is a very 𝐳𝐲𝐤𝐥𝐢𝐬𝐜𝐡𝐞𝐫 𝐓𝐢𝐭𝐞𝐥, which 𝐯𝐢𝐞𝐥 𝐍𝐞𝐫𝐯𝐞𝐧 𝐯𝐞𝐫𝐥𝐚𝐧𝐠𝐭. From today's perspective, the stock is certainly not too expensive. However, since a large part of the sales is made in 𝐋𝐮𝐱𝐮𝐬𝐬𝐞𝐠𝐦𝐞𝐧𝐭, the business performance is strongly 𝐚𝐛𝐡ä𝐧𝐠𝐢𝐠 from China and also in Russia the business was quite good until February 24, 2022. These are 𝐑𝐢𝐬𝐢𝐤𝐨𝐟𝐚𝐤𝐭𝐨𝐫𝐞𝐧 which should be kept in mind. There are companies that offer at least as good, if not 𝐛𝐞𝐬𝐬𝐞𝐫𝐞 𝐂𝐡𝐚𝐧𝐜𝐞n with less thrills. Even though Swatch currently seems cheap to fairly valued, the 𝐏𝐫𝐞𝐢𝐬𝐦𝐨𝐦𝐞𝐧𝐭𝐮𝐦 is once again 𝐢𝐦 𝐊𝐞𝐥𝐥𝐞𝐫.

In the current environment with 𝐠𝐞𝐨𝐩𝐨𝐥𝐢𝐭𝐢𝐬𝐜𝐡𝐞𝐧 𝐑𝐢𝐬𝐢𝐤𝐞𝐧 such as the conflict over Taiwan and the war in Ukraine, I am more 𝐯𝐨𝐫𝐬𝐢𝐜𝐡𝐭𝐢𝐠 with 𝐈𝐧𝐯𝐞𝐬𝐭𝐢𝐭𝐢𝐨𝐧𝐞𝐧 𝐢𝐧 𝐝𝐢𝐞 𝐋𝐮𝐱𝐮𝐬𝐢𝐧𝐝𝐮𝐬𝐭𝐫𝐢𝐞. I'm repeating myself here, but right now I see mostly 𝐂𝐡𝐚𝐧𝐜𝐞𝐧 𝐢𝐦 𝐑𝐨𝐡𝐬𝐭𝐨𝐟𝐟𝐬𝐞𝐤𝐭𝐨𝐫, as you can read in the post on 𝐑𝐞𝐛𝐚𝐥𝐚𝐧𝐜𝐢𝐧𝐠 𝐢𝐦 𝐀𝐮𝐠𝐮𝐬𝐭:

https://www.valueinvestments.ch/vermoegensverwaltung-estoppey-value-investments-value-und-momentum-rebalancing-august-2022

There are 𝐩𝐫𝐨𝐟𝐢𝐭𝐚𝐛𝐥𝐞 𝐔𝐧𝐭𝐞𝐫𝐧𝐞𝐡𝐦𝐞𝐧 to buy 𝐠ü𝐧𝐬𝐭𝐢𝐠𝐞𝐫 that have a 𝐩𝐨𝐬𝐢𝐭𝐢𝐯𝐞𝐬 𝐌𝐨𝐦𝐞𝐧𝐭𝐮𝐦 to boot.

My one 𝐒𝐰𝐚𝐭𝐜𝐡 𝐀𝐤𝐭𝐢𝐞, however, I will definitely 𝐛𝐞𝐡𝐚𝐥𝐭𝐞𝐧 - in the portfolio it has no weight and the next 𝐀𝐤𝐭𝐢𝐨𝐧ä𝐫𝐬𝐮𝐡𝐫 is coming for sure.

In the 𝐕𝐞𝐫𝐦ö𝐠𝐞𝐧𝐬𝐯𝐞𝐫𝐰𝐚𝐥𝐭𝐮𝐧𝐠 for my clients, I look for a 𝐊𝐨𝐦𝐛𝐢𝐧𝐚𝐭𝐢𝐨𝐧 between 𝐭𝐢𝐞𝐟𝐞𝐫 𝐁𝐞𝐰𝐞𝐫𝐭𝐮𝐧𝐠 and 𝐡𝐨𝐡𝐞𝐦 𝐌𝐨𝐦𝐞𝐧𝐭𝐮𝐦. In addition, I review all companies with 𝐬𝐭𝐫𝐞𝐧𝐠𝐬𝐭𝐞𝐧 𝐐𝐮𝐚𝐥𝐢𝐭ä𝐭𝐬𝐤𝐫𝐢𝐭𝐞𝐫𝐢𝐞𝐧 in order to be more aware of the 𝐕𝐚𝐥𝐮𝐞 𝐓𝐫𝐚𝐩 𝐯𝐨𝐫𝐳𝐮𝐛𝐞𝐮𝐠𝐞𝐧. You can also find my current portfolio in Estoppey Value Investments asset management on the blog:

https://www.valueinvestments.ch/blog

$UHRN (+2,17 %)