IMP

Implenia

CH0023868554

IMPN

IMPN

Once again, here is an update: With a heavy heart, I had to part with the only Swiss stock in the portfolio: The talk is of Implenia $IMPN (-0,29%)

Have you already pulled the emergency brake on an investment?

If so, which one was it and why?

As always, you can find the original blog post including a small table & pictures here:

https://www.valueinvestments.ch/vermoegensverwaltung-value-und-momentum-september-2023

And the full text content I post directly here on Getquin to read:

Portfolio sales and purchases

Shortly after the last rebalancing, I had to pull the emergency brake on one stock: Implenia was showing one warning sign after another, especially regarding qualitative metrics on profitability, financing and efficiency. Therefore, I decided to sell the shares of Implenia - on August 28, 2023 - after less than one year.

When I bought in October 2022, the world looked even better for Implenia. During the current year, however, the situation deteriorated visibly. So, with a heavy heart, I had to part with the only Swiss stock in the portfolio. At least I managed to do so at a price of CHF 38.31. This means that I still managed to get out with a price gain of 18.2%. The dividend brought in another 1.2%, which resulted in a plus of about 19.4% - that consoled me a bit about the pain of separation.

Excitingly, on August 30, 2023 - two days after my exit - the news came out: "Implenia-Grossaktionär Norbert Ketterer platziert 1.3 Millionen Aktien". This corresponded to 6.9% of the outstanding share capital. Now I truly have no clairvoyant abilities, but I am glad today that I dared to exit beforehand. Often one is too late when such news comes out. If I had waited, the shares would be today at CHF 30.05 or about 21.6% down compared to my sell price and compared to the entry price of October 2022 it would still be 7.3% down instead of 18.2% up. Even the 1.2% dividend yield would not have helped much.

On the other hand, the Australian company Whitehaven was allowed to keep its place in the portfolio during the annual review - one could almost say: Some go too early, others stay longer than expected.

The second company I sold was Genie Energy, which saw a nice gain of 49.1%. price gain of 49.1%. Even nicer is that this price gain is tax free - at least for investors with tax liability in Switzerland. Genie Energy has not become outrageously expensive, but there are companies that now have stronger momentum and also score better on quality criteria. One such company is Trican Well Services from Canada: it's a company that sells the shovels and picks used during the gold rush. Only this time, it's black liquid gold and natural gas. In short, Trican Well Services sells specialized equipment and technology for use in oil and gas drilling. A company profile on the company can be found below.

News and developments on the stock market

Uncertainty was stronger in August than it is today. In general, the markets seem to be somewhat directionless at the moment. It's not getting boring, though, because the Americans are once again arguing about their budget - or rather about whether the debt ceiling should be raised, and if so, by how much. For now, there is no government shutdown: Congress bought itself another 45 days yesterday - just hours before the deadline. So far, there have already been ten government shutdowns in the US. The longest shutdown lasted 35 days from December 22, 2018 to January 25, 2019, when Donald Trump tried to push through funding for his "big, beautiful wall" on the border with Mexico.

The U.S. was already paying an incredible $475 billion in interest in 2022. The debt currently stands at over $33 trillion. That's a number with 12 zeros: 33,000,000,000,000. Let someone say that a zero is worth nothing - it always depends on where it is. In other words, that's 99,000 US dollars in debt per person in the USA. And who lent them all that money? All of us to a large extent: Our AHV and pension fund money is to a considerable extent in US bonds.

So it remains exciting and the only thing that is certain is uncertainty. Nevertheless, I feel comfortable with a diversified portfolio. The ups and downs of stock prices are part of it, just like a ship that floats on the waves of the Atlantic.

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Here again an update on the current situation. There have been some changes in the portfolio. A clear table with the current portfolio can be found here:

https://www.valueinvestments.ch/portfolio-vermögensverwaltung

Everything that doesn't need a table I'll post directly here at getquin and hope you enjoy reading:

The weather on the stock market has not really brightened up yet. Paradoxically one can observe that actually positive news lead to further crashes on the stock market: For example, the news that the unemployment figures in the U.S. have reached a low. Fewer unemployed, is supposed to be bad? That sounds almost like Conspiracy theory - but it is not. Fewer unemployed are of course nothing bad, but rather the shortage of labor.

The sober logic behind this is that if there is a shortage on the labor market wages rise sharply. That would actually be good news again - if it weren't for the "little" problem with high inflation: higher wages allow higher prices because people can buy and afford more. The result is that the inflation spiral continues to spin.

And what does that have to do with the stock market?

But why should that be bad for the stock market? The problem is that high inflation calls the national bank into action. National banks are supposed to be responsible for price stability price stability. How do they do that when inflation is high? They raise interest rates. This can ensure that people prefer to save and consumers spend less money. Because not only the interest on savings accounts rises again, but also the interest on debts, such as Lombard loans, consumer loans, leasing and mortgages. In this way, money is withdrawn from the market. This is to ensure that money itself remains valuable due to scarcity and does not constantly continue to lose value, as is the case with inflation.

Prices stabilize when inflation declines. They may even fall if inflation turns into deflation. Exactly the same is true for stocks or other assets. When more money is in circulation, the prices of securities tend to rise. Currently, we are seeing the reverse: Money is being withdrawn from the market, causing prices on the stock market to fall. Energy prices, on the other hand, are rising, but this has nothing to do with monetary policy. monetary policy This has nothing to do with the monetary policy of the national banks, but rather with a shortage of supply in the face of unchanged demand.

In addition, it is not the present but the future that is traded on the stock market. future is traded but the future. This means that the mere expectation of a strong of a sharp rise in interest rates by the by the national banks is enough to drive stock market prices down.

This is exactly what has just happened in the USA: Low unemployment figures indicate a shortage in the labor market, causing wages rise. This increases the demand for goods and services, which in turn causes prices to rise, because these are also a scarce commodity. This increases inflation and threatens price stability. price stability is in danger. The SNB fights this with higher interest rates, which takes money out of the market. This, in turn, is not good for stock market prices.

Asset management - Value & Momentum worldwide

Also in my sample portfolio with the Value und Momentum Strategie this could be observed: The average return per year has risen again to 13.4 % (from +15.3 %). As the price chart above shows: We've been lower, too. But whether this is already the bottom can only be known by a soothsayer - unfortunately I am not one and prefer to stick to the facts of the present. The average return is actually quite good, although it is fair to say that the Recovery after the Corona low has made the biggest contribution. If anything, 2022 has done the opposite, normalizing a phenomenal return of over 30% in some cases. This is also part of investing and provides some Humility.

The air is getting thinner and thinner: At the time of rebalancing in October, only 15 companies were still suitable for investment. Of these, eight are already in the portfolio. So there are 7 companies left, and one of them only has strong momentum because it is being bought out. After this takeover news, the share price went sideways again - so not a valid candidate for an investment either.

Conclusion: The selection was limited to only 6 companies worldwide. I am still waiting for the day when we do not buy a new company - even that would not be the end of the world. In difficult times some cash It is even helpful to hold some cash in difficult times: When the situation improves, you can use it even more.

Rebalancing Value and Momentum

Sold this month was the absolute draught horse in the portfolio: New Hope Corporation with incredible + 142.6 % profit! 131.8 % of this are pure price gains - for investors in Switzerland even tax free. Another 10.8 % are due to the distribution of dividends. Why is such a good company being removed from the portfolio at all? The momentum is intact and the share price has risen sharply. Well, due to the strong increase, the company is no longer valued quite as favorably compared to others. Therefore, it is consistently exchanged for companies that are cheaper to buy and have even more more potential upwards.

The second company that was sold is Myer Holdings. The company is in the retail business and is finding it very difficult to generate profits in the current environment. It is sold with a loss of -10.2%. Without dividends, the loss would even be around -19%.

New a company has found its way into the portfolio, which probably all Swiss know: It is the Implenia AG from the construction sector. The new headquarters Glattpark in Opfikon is less than 100km away from the headquarters of the Estoppey Value Investments AG in Basel. I was myself a little surprisedI was a little surprised myself, because with a universe of around 220 Swiss companies traded on the stock exchange, the choice is not exactly large. In addition, for once it is not a company from the energy sector. But it seems that the company has done its homework in the recent past. True to the motto: Lifere nid lafere! Which is Swiss German and means as much as: Work (deliver) and not mooch! As can be berndeutschen Lexikon can be seen. Implenia's share price in mid-2018 was also once at 80.- Swiss francs and then collapsed to below CHF 20.-. Last year, Implenia managed to turn this trend around, and in a difficult year like 2022. In addition, the crash in the share price has meant that the company is now very favorably valued valuation. The favorable valuation combined with the high momentum is exactly what I like when it comes to investing. I am very curious how Implenia will develop in the coming year.

The second newcomer is Covenant Logistics - a long-established logistics company from the USA. Covenant Logistics specializes in express and shipping solutions as well as warehousing. Particularly in the current environment with supply bottlenecks and high demand, services in the logistics sector in particular are are in great demand. After the slump in logistics due to the Corona pandemic, the company was able to develop very well - precisely because of the pent-up demand of the economy.

Here is the link to the whole blog post:

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

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