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The name "Dutch Trader" refers to The Golden Age. This was a period in Dutch history, roughly spanning the 17th century, in which Dutch trade, science, military and art were among the most acclaimed in the world. Dutch ships hunted whales off Svalbard, traded spices in India and... More
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  • Royal Ten Cate, Materials That Make Difference
    Nowadays it is also possible for international (American) investors to buy shares on NYSE Euronext Amsterdam. One midcap stock that is interesting for investors that want to diversify their international portfolios is a company called Royal Ten Cate (ISIN NL0000375749, Ticker KTC NA). It has a market capitalization of almost EUR 600 mln and trades around EUR 23.

    The TenCate share is listed on NYSE Euronext Amsterdam and has formed part of the AMX (midcap) index since 2008. The share is followed by around ten analysts from leading Dutch banks and securities houses.

    Ten Cate is an industrial company active in the production of technical textiles and engineering components. The company is divided into three sectors: Advanced Textiles & Composites, Geosynthetics & Grass and Technical Components. Above these sectors is the Holding. Each sector consists of commercial divisions. See organogram

    One of the key products from the Sector Textiles & Composites that is supplied by their division TenCate Protective Fabrics USA is TenCate Defender™ M  Since 2007, TenCate Defender™ M fabrics have repeatedly been chosen by the U.S. Army and U.S. Marine Corps for ground troops in the Flame Resistant Army Combat Uniform (FR-ACU) and Marine Corp’s Flame Resistant Organizational Gear (OTC:FROG) programs. TenCate Defender™ M fabrics are made from a unique fiber blend that includes Lenzing FR® Rayon. As the leader in inherently Flame Resistant materials, TenCate Protective Fabrics also provides fabrics used in other American programs such as Inclement Weather Combat Shirt (IWCS), Army Aircrew Combat Uniforms (A2CU), Improved Combat Vehicle Coveralls (ICVC), Navy Shipboard Jackets, Army Flash Hoods and several others. TenCate Defender™ M is also delivered to the Norwegian Navy and to the Soldier of the Future program of the Italian Army.

    Ten Cate published very strong H1 results, with sales increasing by 30% (of which 27% autonomously) to EUR 592.4 mln. EBITA increased by 47% (organic growth 60%, currency impact -11%, divestments -2%) to EUR 56.1 mln and net profit came it at EUR 33.1 mln, 69% higher. Earnings Per Share EUR 1.30 (H1 2010: EUR 0.78).

    The strongest sales and profit increase was recorded at Advanded Textiles and Composites TenCate Defender M products and Tecasafe Plus products were important drivers. At the Geosynthetic & Grass sector, an solid increase in sales was recorded, but profits dropped by 26%. This was partly due to raw materials increases at Geosynthetics and a restructuring process in the synthetic turf market.

    The company maintains  its positive outlook for this year, stating that it expects record revenues for the full year.

    Royal Ten Cate has strong positions in very attractive growth markets, leading to a solid growth path, also in the longer term. At a P/E multiple below 10, the shares look attractive. The recent share price of EUR 23.61 offers an opportunity for investors that are looking for a company with innovative products and strong market positions. With an EPS of EUR 2.62 (2011) and EPS of EUR 2.88 (2012) I believe the share should trade around EUR 30. Dividend yield is 3.8%.   

    More information you can find on their website:

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Aug 02 6:03 AM | Link | 3 Comments
  • Artificial Life in Denial

    My first article on Seeking Alpha was an article called Artificial Life Attractive Trade For The Booming iPhone Pad Market.

    A lot has happened with the company since my first publication. Auditors come and go and accounting problems remain unresolved. KPMG resigned on March 30 and BDO resigned on June 27 this year. 

    The problem seems to be the substance of certain material transactions, accounting for recognition of revenues (including timing and actual receipt of cash) and valuation of intangible assets. In April I already mentioned that securitizing their receivables is a red flag. Acquiring equity stakes with non-cash assets (accounts receivables) raises questions. Selling receivables enables the company to collect cash sooner, but the firm collects less cash because they are sold at a discount.

    Despite these issues Artificial Life is still alive and engaged new auditors, Parker Randall from Hong Kong The 10-K (FY 2010) and the 10-Q for the quarters ended March 31, 2011 and June 30, 2011 will be completed on or before August 15 according to the document. Let's hope Parker Randall doesn't resign before.

    In my opinion one of the problems of this company is the CEO and Chairman Eberhard Schoneburg. Mr. Schoneburg is a well-known IT and mobile industry veteran. He is a prominent speaker at industry conferences worldwide and has written five lecture books and more than sixty research papers pertaining to computer viruses, neural networks, evolution strategies and genetic programming. Mr. Schoneburg holds a Master of Science degree in Mathematics from Freie Universität Berlin, Germany.

    The CEO and Chairman is a Technician and a major shareholder without the knowledge or skills necessary to run a successful business. But as an owner of a business, he has to deal with hiring and managing employees, budgeting, taxes, payroll, administrative tasks.

    An entrepreneur like Schoneburg has to do the work of envisioning the business. 

    Central to this approach is repeating: you are not your business. Even if you are the one who actually drills the teeth or performs the exam, you must view your business as your end product. You can be a Technician and not be the business. If you don't figure that out, you'll never be able to get free of the business, to retire or — and this is where it gets good — only work when you want to.

    When you realize that your business is your product, you can step outside of it and reinvent it. And this holds true for any Technician, It all starts with a change in the way you think about your business; it starts with entrepreneurial thinking.

    The Technician thinks: Time = Work = Money. I spend the time, I work hard and I earn money. To get more money, I work harder.

    The Entrepreneur thinks: Time = Equity = Freedom. I spend the time, I build the equity of my business and I get free of the business. To get more freedom, I build more equity.

    The Technician thinks: I do the work.

    The Entrepreneur thinks: Someone else does the work.

    The lesson here is that you don't have to give up the technical work if you have the knowledge to build a business that supports that technical work. You have to develop your business so that the systems run the business, and let people run the systems.

    The CEO's job is to lead and a big part of leadership is deciding who does what job.

    Despite all the issues and red flags Artificial Life has encountered it has to explain to investors why certain issues where not resolved, that's the only way to regain trust and faith in a promising business.

    In my opinion the company has still value but how much it's hard to calculate right  now. Games are still being downloaded (sold) and people are still being hired. Maybe you can apply for a job as a CEO in the future.

    Disclosure: I am long OTCPK:ALIF.
    Jul 16 6:40 PM | Link | 9 Comments
  • Crapshoot Investing
    Great book that gives you some inside in the flash crash and how we got there.

    Despite the author mentions that the book was produced under a tight deadline I think he did a fantastic job to inform the public at large some important information.

    Crapshoot Investing is the story of well-intentioned but disastrously wrong-headed decisions by Congress ad securities regulators in the destructions of investor's faith in fair markets.

    The change in the investment landscape by High Frequently Traders (HFT) has turned the entire equity market in a gigantic derivative product with no underlying value. The same phenomenon that had brought down the markets in 2007.

    HFT's look at historic price discrepancies and buy stock on that basis. They don't care what the name of the underlying company is or what its future growth is going to be. HFT merely tries to predict if a stock will go up or down over the next several minutes. 

    Personally I think that not only the machines (HFT) have lost touch with the market fundamentals. A lot of retail and professional investors are also playing the momentum game, which has of course nothing to do with investing.

    The classic buy-and-hold strategy has been a big bust. The market has become a lighting fast roller coaster. 

    The market was supposed to be fair efficient, and friendly to long-term investors. It turned out that it wasn't any of these things. Because of the micro-managing of the SEC, the market has become unnecessarily complicated, disproportionately volatile, and less accountable then ever before.

    The old system that had been dominated by market makers may have been imperfect, but it had worked fairly well for decades. 


    Tags: Book Review
    Apr 09 3:04 PM | Link | 1 Comment
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