🤑247capital #27 | BASF | Warren Buffett turns 91🥳
Follow-Up, Stock Brothers | BASF, Outlook to September, Tweets of the week ...
Hi Everyone 👋,
Welcome to the #27 issue of 247capital — your weekly source of Investment Research. If you are new, you can join my email list here, or👇🏻
The follow-up to former Issues
Below you´ll find the overview of all bought shares since Issue 1 and the current state. Please keep in mind we´re here for the long run. 5-10 years horizon at least.
$TAP - bought at $44.95 - Issue 1
Closed the week at $47.51 (up 5.70%)🔥
$GEO - bought at $5.79 - Issue 7
Closed the week at $7.65 (up 32.12%)🔥
XTRA:DFV - bought at 12.96€ - Issue 8
Closed the week at 13.70€ (up 5.71%)🔥
READ - bought at 39.25SEK - Issue 12+24
Closed the week at 36.98SEK (down 5.78%)❄️
$HIMS - bought at $8.28 - Issue 12+25
Closed the week at $7.73 (down 6.64%)❄️
$TAP - The field test of Topo Chico was, let´s say, sobering 😆
Tangy Lemon Lime was excellent, while Cherry Acai and Tropical Mango we´re kind of undrinkable, in our opinion. Let´s see how the other consumers are responding.
$HIMS + READ - Consolidation phase.
Stock Brothers - BASF SE | BASF
Share price: 66.56€ * Market Cap: 61Mrd€ * EPS: -0.65 * P/E Ratio: - * Div: 4.96%
Monday, August 30th, 2021 - My brother Florian is back with some new research.
BASF SE - Part I:
Before we get started, I would like to thank all of our new subscribers for their interest in the 247capital newsletter. And you are welcome to recommend us to others.
As already announced, I have looked into the chemical company BASF SE and dealt with it in greater depth.
Readers who have been with me a little longer will have noticed that the proportion of German companies covered in this newsletter is relatively small. This is worth mentioning because Germany is the largest economy in Europe, and on the other hand, I live in Germany myself. (As a subscriber, you´ll find more about my background in the previous newsletters.)
My personal opinion is that Germany does not have a very entrepreneur-friendly environment. So why did I decide to introduce BASF SE here?
The answer is relatively simple. There is no singular reason, but several. First, BASF SE is the largest chemical company in the world (in terms of sales). Second, as the industry leader (the nearest competitor, also in terms of sales, would be the American company Dow Chemical), there are synergy effects in purchasing; the larger the volume purchased, the better the negotiating position.
One can, therefore, certainly speak of market power or a moat. However, it is not only the interesting size but also the fact that BASF SE has higher research and development expenditures than many of its competitors.
I am a great supporter of companies that invest in research and development to defend and expand sales, profits, and market share in the future.
As free, independent, and attentive investors, we look to the future because, on the stock exchange, the future is traded and not the distant past.
An interesting saying about this, from my student days, comes back to my mind:
"Accountants look to the past, entrepreneurs look forward to the future".
Nothing against accountants, a very responsible task, no question. But it's a matter of type; you know it from your circle of friends. Some people always talk about the past, and others talk about what they still have in mind. This is not an evaluation of good and bad, but an observation. Can you confirm this observation? About your feedback, I am always happy!!!
Research & Patents
Research also brings new patents. Patents I also find very, very interesting. This is especially true when they come to market and mutate into a blockbuster because then the "traffic light" switches to green.
BASF SE is very diversified in terms of its business areas. Therefore, there is a diversification of sales markets and no cluster risk that one key industry is wobbling and dragging the company into the abyss.
Many analysts accuse BASF of being too diversified and call for a clear focus on the core business. But, again, my personal opinion is that BASF would be better served by the Corona measures caused by politicians, with great economic impact, than many may believe.
To list just a small excerpt from the BASF product range:
Paints
Coatings
Plastics and foams
Vitamin preparations for humans and animals
Chemicals extracted from petroleum by refining(ethene, propene, benzene)
Chemicals that have not yet been fully processed
Pray-on coatings
Adhesives
Catalysts
Ingredients for cosmetic products
Plant protection products
Seeds and advice, etc.
In other words, a colorful bouquet, as the saying goes, of things that are indispensable in modern society.
Even though I'm not particularly enthusiastic about the anti-business environment in Germany, the fact is that BASF SE has many sites outside the EU. So, for example, there are large plants in the USA (e.g., Texas), China/Asia.
This puts the company in a position to say they are leaving and pulling up stakes if you think you're upsetting them politically too much through taxes, regulations, or the like. As an investor, this is also an important aspect that you don't have to rely on an intellectually limited government.
Dividends
Another aspect I keep reading in personal addresses from you guys is the desire for dividends to keep your personal investment cash flow going. BASF SE is one of the very few German companies that officially professes to want to pay a dividend and to do so, to pay a dividend and to increase it if possible.
The company's investor relations website includes the following statement:
"Long-term value growth with attractive dividend policy - annual increase in dividend per share is targeted."
In contrast to the USA, the dividend policy in Germany is very immature. BASF SE is not only one of the 30 largest German companies listed on the DAX, but also historically and ranks historically and currently a top position in the DivDAX.
Outlook to Part II
So much in advance, so that you could get a first impression. Next week I will go deeper into the figures in the 2nd part and tell you how to proceed, as this question has also been coming up recently from your side.
I wish you a dark green week and see you next Monday, Florian.
Quote of the Week
“There are lots of ways to make money, but it is really important to find one that fits well with the way that you are built emotionally.”
-Yen Liow
Tweets of the week
Article of the week - Warren Buffett turns 91
CNBC posted about Warren Buffett, who turns 91. The legendary investor prepares Berkshire Hathaway for a new economy.
At the end of June, Berkshire’s cash pile stood at $144 billion, still near a record despite the company’s massive buyback program.
Instead of deal-making, Berkshire has been focused on returning capital to shareholders.
Company names of the week - R
This is a list of company names with their name origins explained.
Today's Top 5 letter R:
Raytheon – "light of the gods"; maker of missiles such as Patriot, Maverick, Sidewinder, and Tomahawk, among other military technology
Red Hat – while at college, company founder Marc Ewing was given the Cornell lacrosse team cap (with red and white stripes) by his grandfather. People would turn to him to solve their problems, and he was referred to as "that guy in the red hat" By the time he wrote the manual of the beta version of Red Hat Linux, he had lost the cap, so the manual included an appeal to readers to return his Red Hat if found.
Reebok – alternate spelling of rhebok (Pelea Capreolus), an African antelope
Ricola – from "Richterich & Compagnie Laufen" after the company founder Emil Richterich and the town of Laufen, Switzerland, where the company was founded.
Rio Tinto – the Anglo-Australian multinational mining company's name comes from the Rio Tinto (Red River) in southwestern Spain, which has flowed red since mining began there about 5000 years ago, due to acid mine drainage.
Outlook to September
With the Fear & Greed Index switching from Extrem Fear to Neutral (25->50) compared to last month, I expect markets to slowly rise with fewer opportunities in the broader market—targeted stock-picking time.
Got Feedback, Questions, or Suggestions? Just Hit Reply; I’d love to hear your comments.
Thanks for reading, and until next Monday,
Sebastian from 247capital