Porsche Stub Stock

October 13, 2008

One last post about Greenlight Capital’s letter to investors. Below is a excert about Porsche AG, who holds a 35% interest in Volkswagen, an investment that is larger than Porsche’s current market cap.

The PAH3 stub (symbol formerly POR) fell sharply during the quarter, as PAH3 increased its stake in Volkswagen from ~30% to ~35% and the state of Lower Saxony postured that it would consider increasing its stake from ~20% to ~25% in order to keep its veto rights if the European Union deemed that this was necessary. We believe that these actions are providing an artificial bid for Volkswagen shares in the market place. We also suspect the stub value suffered due to liquidations by other funds including a certain failed investment bank that market participants believe held the stub. On a fundamental basis, we believe that Volkswagen is highly overvalued at 21 times estimated 2009 EPS, more than twice the multiple of its peer group.

PAH3’s market cap is €13.3 billion and it has €4.2 billion of net debt. At current market prices, the company’s 35% interest in Volkswagen is worth €28.9 billion.


Activist Investors

September 16, 2008

Hedge Relations offers a free newsletter that identifies investments made by activist investors.

Good to Great by Jim Collins

June 16, 2008

I have just finished reading Good to Great by Jim Collins and was going to post a brief book summary. But a quick search reveals a mindmap of the book and WikiSummaries already has a chapter by chapter summary.

Interesting Links

June 12, 2008

Resources for Value Investing

May 20, 2008

Virtual Worlds

December 11, 2007

GP Bullhound have released a research note (pdf) on Virtual Worlds.

The key findings are:

  • Experts predicting that 80% of internet users will become members of virtual worlds by 2011.
  • Virtual Worlds increasingly segmented by demographics and hobbies.
  • In 2007, 24% of US child and teen internet users will visit virtual worlds. By 2011, an estimated 53% will do so.
  • Multiple revenue streams are emerging in the virtual world space. The main business models identified are:
    • The sale of virtual goods.
      • It is key for virtual worlds to have multiple payment methods ranging from credit cards, to Paypal or SMS in order to be able to process micro payments efficiently and to allow users to pay conveniently.
    • Subscription and premium subscription.
    • In-world advertising and product licensing.
      • In June 2007, Parks Associates estimated that US$15m was spent on virtual world advertising in the US in 2006 and projected that it would rise tenfold to US$150m in 2012.
  • Given the competitive environment the virtual worlds operate in, they forecast that subscriptions and premium subscriptions for virtual worlds will decrease in prominence by 2010.
  • Virtual worlds will instead benefit from the growth of advertising and the purchase of virtual goods.

You can download the full research note (pdf) from their website.

Online Valuation Model

September 27, 2007

Just came across www.istockresarch.com they have a online DCF valuation model. And use it to value a number of companies in the S&P 500, NASDAQ etc.

You can plug in your own numbers to their model to get your own valuation.