🤑247capital #28 | BASF II | Ted Weschler🤑
Follow-Up, Stock Brothers | BASF II, Article of the week | Ted Weschler ...
Hi Everyone 👋,
Welcome to the #28 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 $46.98 (up 4.51%)🔥
$GEO - bought at $5.79 - Issue 7
Closed the week at $7.91 (up 36.61%)🔥
XTRA:DFV - bought at 12.96€ - Issue 8
Closed the week at 13.76€ (up 6.17%)🔥
READ - bought at 39.25SEK - Issue 12+24
Closed the week at 36.24SEK (down 7.66%)❄️
$HIMS - bought at $8.28 - Issue 12+25
Closed the week at $8.21 (down 0.84%)❄️
$HIMS - Hims & Hers Health appoints the former CMO of Zola, Mike Chi, as the company’s first-ever Chief Growth Officer.
Mike will help lead the charge as we look to continue delivering robust growth in our established Hims categories and double down on our emerging new Hers-focused specialties, such as Mental Health and Dermatology. He is truly a unique mind with a relentless work-ethic and expertise in channel level marketing that is rarely seen in marketing leaders.
- Andrew Dudum, CEO
Also, Miley Cyrus started her HERS campaign.
READ - I found some nice metrics from Spotify ($SPOT) on Twitter. Curious how this looks like for Readly.
Stock Brothers - BASF SE | BASF - PART II
Share price: 66.56€ * Market Cap: 61Mrd€ * EPS: -0.65 * P/E Ratio: - * Div: 4.96%
BASF Numbers
Welcome to the 2nd part of the BASF SE analysis. In a piece of quick information for the employees of BASF SE dated July 28, 2021, the company states:
Q2 2021: BASF with very strong second quarter due to higher prices and volumes
Sales growth of 56 percent to €19.8 billion
EBIT before special items increased strongly to €2.4 billion
Cash flow from operating activities of 2.5 billion euros, up by 295 million euros higher than in the prior-year quarter
2021 outlook for sales at 74 billion euros to 77 billion euros and EBIT before special items to 7.0 billion euros to 7.5 billion euros.
“In all regions and all segments we achieved volume and price increases compared to the second quarter of 2020."
- CEO Brudermüller
Thus, for example, the german Handelsblatt already headlined on 09.07.2021:
“Strong industrial economy causes profit explosion at BASF".
How do these good numbers come about? First, you have to know that BASF SE is a cyclical company. Means in short:
If the economy weakens, a cyclical company notices it first. Customer orders decline.
Of course, the same applies in the opposite case. If the economy picks up, a cyclical company is immediately ahead again. Customer orders increase.
As I "suspected" or mentioned in Part 1, BASF SE was able to leverage its market power and strong market position and pass on higher prices to its customers.
As a result of the political Corona measures such as lockdown, the productivity of the overall economy declined. As a result, employees were laid off in many companies, or short-time work had to be registered. This led to panic on the stock markets in March 2020 and sharp price declines.
BASF SE also felt the impact, with the share price plummeting from around 65 euros in January 2021 to around 40 euros. So we're talking about a 40% downward price swing here.
General observations
Some of you might feel like you're in an elevator because it also goes up and down, as one hears. A quote from Warren Buffett comes to mind:
"Never buy a stock unless you can live with the price being cut in half."
Then, after the price recovers, come phrases like:
At that time, you should have bought at price X.
or
Whoever bought at price X back then would have made $1.000 into $1.000.000 today.
These sentences are often used in connection with Apple, Bitcoin, Amazon, Alphabet (formerly Google), and some others, which are called just so. But this is all stock market theory. Why?
When prices fall, many people panic and sell.
At the (temporary) lowest price, many people watch and wait for the bottom to form, have doubts about the company, whatever, in any case, no courage to buy. These are just 2 striking, exemplary examples.
Who bought Apple shares in the so-called dot-com crisis (bubble) in 2000 for less than 1 dollar and held them until today? I am always pleased to receive your comments.
BASF - My/Our approach
The company has a positive outlook for the year and many interesting projects in the pipeline. For example, it has formed a joint venture with Chinese company Shanshan to produce battery materials in China.
At a share price below 55€, the current dividend of 3.30€ would have a dividend yield of 6%. So this is the place to lurk until there are price setbacks. I am / we are invested in BASF SE since August 2019 with an average price of 55.38€.
Quote of the Week
“I think track records are very important. If you start early trying to have a perfect one in some simple thing like honesty, you’re well on your way to success in this world.”
- Charlie Munger
Tweets of the week
Article of the week - From $70,000 to a $264 million fortune
The Washington Post posted about Ted Weschler’s simple tricks that turned his $70,000 retirement account into a $264 million fortune.
In 2010, Weschler, a long time Buffett admirer, entered and won the annual auction run by the Glide Memorial Church of San Francisco to have a lunch with Buffett by making a $2,626,311 donation. He also won the 2011 auction by bidding $100 more.
Rather than join Buffett for high-profile lunches in New York City, Weschler flew to Buffett’s hometown of Omaha to dine at a since-closed steakhouse called Picolo’s.
These two lunches, which Weschler says lasted about four hours each, resulted in Buffett offering Weschler a job.
Company names of the week - S - PART I
This is a list of company names with their name origins explained.
Today's Top 5 letter S:
Samsung – meaning "three stars" in Korean.
SAP – SystemAnalyse und Programmentwicklung (German for "System analysis and program development"), a company formed by five ex-IBM employees who used to work in the 'Systems/Applications/Projects' group of IBM. Later, SAP was redefined to stand for Systeme, Anwendungen und Produkte in der Datenverarbeitung (Systems, Applications and Products in Data Processing).
Saudi Aramco – Aramco name was derived in 1944 when California Arabian Standard Oil Company (Casoc) changed its name to Arabian American Oil Company. The Saudi government purchased the company in 1980 and changed its name to Saudi Arabian Oil Company or Saudi Aramco in 1988.
SEAT – an acronym from Sociedad Española de Automóviles de Turismo (Spanish Corporation of Touring Cars)
Seiko – Seiko, now referred to in katakana as セイコー("seiko"), was originally named in kanji as 精工(also "seiko"). The two characters were taken from the phrase 「精巧で精密な時計の生産に成功する工場」, the company's vision which roughly translates to "a factory(工場:kojyo)that successfully(成功:seiko)produces(生産:seisan)exquisit(精巧:seiko)and precise(精密:seimitsu)watches". – According to Seiko's official company history, titled A Journey in Time: The Remarkable Story of Seiko (2003), Seiko is a Japanese word for "exquisite" or "minute" (both spelled 精巧), as well as a word for "success" (spelled 成功). Now you know 😆
New Additions to S&P Indexes
S&P Global (ticker: $SPGI) announced adjustments to its indexes including S&P 500 on Friday, September 3rd. The most notable additions are - Match Group - Tinder (ticker: $MTCH) and Ceridian HCM (ticker: $CDAY) to the S&P 500 index; and Tandem Diabetes Care (ticker: $TNDM) to the S&P 400 MidCap index. These companies will be included in the indexes from Monday, September 20th.
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