Value Ideas Blog
3u Holding – Selling at 1/3 of the current book value?
Today we want to take a look at 3U Holding (ISN: DE0005167902, Symbol: UUU). It’s a small cap enterprise that caught our attention. The book value at the end of Q3/13 was about three times the current shares price, i.e. 1.29 EUR (by our calculations) vs. 0.42 EUR on Jan 10, 2014! In the chart below you can see that the company is today 80% equity financed, up from 36% in the year 2006. So, let’s take a closer look to find out if this is an investing opportunity from a value investing point of view or a potential value trap… (This is the first part of the analysis, keep in mind that you should do your own research and that this is not a selling or buying advice)    Equity development   read more
Today we want to take a look at one of the latest books that we have read, namely “The Investment Checklist; The Art of In-Depth Research” which is written by Michael Shearn. The book is around 330 pages long, well written in and quite easy to understand. As a rating we would suggest 4.5 of 5 stars.   The book has 11 chapters and deals with the systematization of the investment process. According to the author this systematization is necessary because of the fact that investors make the most mistakes when they rush into an investment idea without doing the proper work to understand the value of a business. The investor is betting in probabilities that certain assumptions will work out, instead of basing their investment decision on real analysis. The key to be better investor is to truly understand the value of a business and where it creates its value  by answering questions about it. read more
More warning signs are rising, companies margins are at their peeks: “A slowdown in profit growth would hardly be surprising, given that profits are at their highest as a proportion of American GDP since the second world war. But that points to another oddity. On the best long-term measure, the cyclically-adjusted price-earnings ratio (which averages profits over 10 years), American equities trade on a multiple of 25.4, according to Professor Robert Shiller of Yale University, well above the historic average.” Read the full article of the Economist here.   Probably the biggest money scandal in Germany in the year of 2014: The nearby bankruptcy of Prokon, where over 75.000 Germans have invested a part of their money. Another example of the famous economic quote: There is no free Lunch! English  short version.   Very good blog and a very good article over the moat of financial service companies on Punch Card Investing, which perfectly fits in our current research process.   And for the first time, a video Link to an interview with the World’s Best Investment Advices from valueinvestors like Warren Buffett, Peter Lynch, John Templeton, Seth Klarman, Charlie Munger, Walter Schloss, Bill Ackman, Bruce Greenwald, …   And one quote  to think about for the week:  “When he was dry, he believed it was alcohol he needed, but when he had a few drinks in him, he knew it was something else, possibly a woman; and when he had it all — cash, booze, and a wife — he couldn’t be distracted from the great emptiness that was always falling through him and never hit the ground.” Denis Johnson  
The book we are going to talk about today is not quite unknown as the author has already given a TED talk about the subject, obviously not nearly as scientific and well-structured as the written work. The focus does not lie on investing, but moves from a macroeconomic to a historical approach to understanding how prosperity evolved during the development of civilization. It’s ‘The Rational Optimist’ by Matt Ridley.   The main subject of the book is to present ‘the case of sunny optimism’ and to show that ‘the world is networked, ideas are having sex with each other, the pace of innovation will redouble and economic evolution will raise the living standards of the twenty-first century to unimagined heights, helping even the poorest (…) to afford to meet their desires as well as their needs.’ The author states that ‘although such optimism is distinctly unfashionable, history suggests it is actually a more realistic attitude than apocalyptic pessimism.’ Let’s have a look at some of the most astonishing arguments:   read more