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Redrut
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I am a hedge fund analyst who has also worked on the sell side and within a derivatives house. I enjoy looking into the finer details of companies and put a little less weight on technicals. ...and no, the picture isn't me but a notable politician, and yes Mr. Samaras has been replaced! I am... More
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  • RedRut Performance 4

    Hello readers, another timely update of my picks and performance. Unfortunately, my article frequency is rather low at present, mainly due to covering stocks that most of you across the Atlantic wouldn't care about, still I have been giving a lot more information on Twitter and so most of my picks for this period can be attributable to my ramblings there.

    Of course, I will write when I think I can add something to a debate but my workload just gets heavier and heavier so don't count on seeing a barrage of posts from me any time soon.

    Before going into my picks I suppose its worth taking the time to talk about my amazement with the bulls of GoPro and the dangers of reliance on a story and ignoring the data. My thoughts on GoPro are pretty rational and I am only short due to the technicalities of the IPO, otherwise I'd be a 'wait and see'.

    There are plenty of great products around of which GoPro is one but the main problem of story based investing is that it is not grounded in anything realistic. In my opinion, if GPRO IPOed at $10bn market cap, many of the bulls would be equally bullish and be painting the same story.

    At the end of the day, investing is never an absolute science and I am quite amazed by the amount of people who are SO adamant they are right that they lower themselves to petty insults.

    One particularly funny Tweet read -

    "Redrut my noob friend, over 45 your nuts will squeeze we headed for 60-70 u dont understand #momo $GPRO #stocks"

    There are good companies and bad companies, there are overvalued companies and undervalued companies and the best you can do as an investor is make a reasonable range of assumptions and then figure out the price target that your valuation implies. 95% of the time you will be changing your model within 3 months as you realise that forecasting is a rather difficult exercise and the volatility of the markets make it that much more difficult.

    If GPRO rallies 30% I will no doubt get tweets calling me a 'noob' a 'weiner' etc etc. If GPRO drops 30%, I won't be sending the same tweets the other way. It's all about a balance of risk/reward as in the long run, no-one really knows anything!

    Moving forward to my picks....

    Heidelberger Druck (HDD GY In Price EUR2.62 -currently 2.50)

    If you followed my advice you would currently be down 4.5%, however I was buying this stock at as low as EUR2.20 so I chalk this as a losing trade despite the subjectivity.

    This position was carried over from my previous update and I continue to hold as the management are doing a fantastic job of restructuring the company in the face of a declining marketplace and significant debt.

    The company makes offset printing machines and has a near 50% global market share. They have suffered over the past 6-7 years as the 4 remaining competitors attempted the razor/razor blade model to pricing which lead to losses endemic to the market place. The new CEO came from outside the company and has begun shedding unprofitable segments, cutting the useless R&D budget and rejecting non-profitable orders. As a result the revenues have dropped markedly but margins have grown. This year, the company will embark upon further portfolio streamlining and I will hold this company until 3.50 or so based on an EV/EBIT valuation at a 10% discount to capital goods peers.

    GoPro (GPRO) - Shorted at 46.50

    My call came from a Stocktalk followed by a more detailed article. Fundamentally I dislike the company's long term prospects but do admit their could well be further growth over the next few quarters. My call is based purely on the structural undersupply of shares in the IPO which lead to a squeeze as fans jumped over each other to bag a few shares of their own

    Followed my advice and you would be up 16%

    Outokumpu OUTKF

    I first mentioned this company on April 9th and have liked it since they managed to sell some business units back to Thyssenkrupp in exchange for the nullification of a +1bn EUR loan note.

    This deal allowed the company to deleverage the balance sheet overnight once again making them investable.

    Couple to this the upcoming US stainless plant, the strategic access to ferro-chrome, the Indonesian nickel ban, the Russian Turbulence, the EU anti-trust suit against China, the cyclical recovery and the decreasing supply of stainless, you have a long term winner.

    Followed my advice and you would be up 56%

    Suedzucker OTCPK:SUEZF Shorted at EUR18.30

    This short I gave on the profit warning which saw this stock smashed to pieces, ne'er to recover. With the EU sugar quota system due to expire in 2017, it is likely the European Sugar prices will converge to world prices. This means lower top line for the company and drastically lower EBIT through negative leverage.

    This is still a structural short

    Followed my advice and you would be up 25%

    Serco OTCPK:SECCF Bought at £4.24

    I was blindsided by Mr.Soames kitchen sinking when I recommended a buy on this stock as another profit warning in a long line over the past 12 months had led to a weak balance sheet for which the group needed to issue a rights issue. This is a long term own but don't expect to see too much to soon.

    Followed my advice you would be down 12%

    Alstom OTCPK:ALSMY

    I wrote an article after the first bids for the power segment came in suggesting the target price to be between EUR29 and 34 per share. Unfortunately, since the French state stepped into the frame, investors lost confidence in investing in a company attached to a socialist government. I haven't had enough time to follow this so in the face of uncertainy, I would close the investment and take a loss. The stock is trading 14% below my mean price target. I recommended accumulating below 28.50 meaning

    Followed my advice you would be down 7%

    I also made a long investment in both Xeros and REC Silicon, the latter of which is flat and the former is down 25% but I will stress that Xeros is a £60m company and is subject to wild swings. I am a long term holder here but see no point on expanding on the stock since I doubt many of you would be interested. If you were, give me a message and I'd be happy to share my views

    Previous picks covered in earlier posts (brackets indicate, should you have held after I closed the trade)

    ...RM2, you lost 14% (NO!!)

    ...Herbalife, you made 15% (NO!!)

    ...Pandora (PNDORA DC), you made 22% and still open

    ...Blackberry, you made 41% (Well there was a LOT of volatility but ultimately YES!)

    ...Potash corp, you made 16.2% (YES!)

    ...Nokia, you made 37% (YES!!!)

    ...K+S you made 23% (YES!!!)

    ...Dialog you made 30.5% (YES!!!)

    ...Infineon, you made 17% (YES!!!)

    ...Tesla, you made 3.5% (NO!!!)

    ...Potash Corp, you lost 0.5% (HELD ANYWAY)

    Jul 14 8:33 AM | Link | Comment!
  • RedRut Performance 3

    Hello all. My writing has been scant this past few weeks, purely because work has taken over the entirety of my time and I'm simply not covering stocks that the US have any interest in. This may all change soon as I am looking into Fish farmer Norwegian Harvest( [[MHG]]), no view as of yet!

    My stock ideas have mainly been on the back of significant newself, but these opportunities have had such a skewed risk/reward that I was comfotable issuing these recommendations without the need for additional analysis. Of course if I was a longer term holder, I would always (and highly recommend) long winded work and analysis, but these trades were simply trades.

    Anyways

    1) Blackberry [[BBRY]]. As oer my last article I stated that on November 5th, I gave a HOLD recommendation, on December 23rd, I issued a BUY recommendation at roughly $7.10. The stock performed well initially and I held the position until March 10th were I advised selling. Making 41% in such a short space of time has to be taken when it occurs. Although I do think Chen has definitely put Blackberry on the right track, you must maintain that the road is uncertain even for the management team. When you invest you are looking for a story where the ordds are stacked in your favour. No one can assess outcome to 100% and those who constantly suggest that BBRY is a 100% cert for recovery are clearly deluded. Chen himself has stated profitability appears most likely in 2016 and trust me, the market will give you another opportunity to get into BBRY after kitchen sinking has been completed.

    Followed my adivce? You made 41%. Interesingly, the stock is down 8% from when I closed the position.

    2) Pandora (OTCPK:PNDZF). Yes the jewellery company, not the cruddy radio station. The stock wobbled during the Thai protests as their production is located here. Despite the protests going on far afield of the factory and the factory itself reporting 100% operations every day. Take a step back and look at the business. 6.5% cash flow yield, EV/EBITDA of 10.6x (cheapp for the luxury sector) and plenty of further profitability from Asia and online sales (not too mention the end of the share overhang).

    Followed my adivce? You made 14%

    3) Herbalife (NYSE:HLF) A complete no brainer. The big short catalyst everyone was worried about appeared. A FTC investigation thought to take more than a year. Uncertainty = risk = higher required return on capital = lower share price. Longs were afraid of this for years and said it wouldn't happen. When it did happen longs said they knew it was going to happen and it would absolve the company. A year is a long time and shorting this sucker was simple and straightforward. I suggested a short on March the 12th and closed it on the 21st

    Followed my adivce? You made 15% (in one week)

    Even though I didn't publically give these trades out, I did recommend them to a reader and to be frank, they haven't been the best trades. In the interests of transparency, I list them here

    4) RM2 Pallets (RM2 LN) An innovative pallet solution backed by the golden man of retail Rose and the Ex Diageo man MR. Walsh. To top it off, insiders have been size buyers even during share price weakness. I recommened to enter this stock at 84p (the IPO was 88p) and the stock now languished at 73.20. The lessons I learnt here was that 400m GBP is too much to pay for a company with no order book and if the company has financed itself by selling shares privately to small holders, stay well away (they are the first to sell and have already made 5x their money)

    Followed my adivce? You lost 14%

    5) Heidelberg Drucksmachinen (HDD GY) I still stand behind this trade and see upside all the way to EUR3.10 (currently 2.26). The company is the leading manufacturer of commercial printing equipment and the new management has done wonders to steady this loss-making behemoth. Paradigm shifts push against the company as less printers are required in a world with the medium of internet but packaging will never die. The company has nearly 50% installed base worldwide and is soon (IMHO) to announce a landmark deal divesting their loss-making business to a Chinese company and perhaps allowing this Chinese company to use their sales network and brand. In essence, this is very similar to the Blackberry/Foxconn tie up. We make your lossmaking machine profitable and you sell them for us.

    To be clear, the company are public that they are in talks with an Asian buyer for some post press (cutting, folding, stitching) equipment but the rest is speculation on my part.

    Followed my adivce? A mixed bag, I was a buyer when it was 2.20. The stock rallied to 3.10 before coming back down to earth. Happy holder, this is a great story

    So that's the story so far, and here are my previous recommendations...

    Followed me on...

    ...Potash corp, you made 16.2% (YES!)

    ...Nokia, you made 37% (YES!!!)

    ...K+S you made 23% (YES!!!)

    ...Dialog you made 30.5% (YES!!!)

    ...Infineon, you made 17% (YES!!!)

    ...Tesla, you made 3.5% (NO!!!)

    ...Potash Corp, you lost 0.5% (HELD ANYWAY)

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: I am long Heidelberg Druck

    Mar 24 10:21 AM | Link | 2 Comments
  • RedRut Performance: 2

    First thanks to all who read my bits and pieces over the past months. I always enjoy a good debate even when I'm proved wrong.

    At the bottom you will find a recap of my previous picks and if you want the relevant evidence, there are links on my previous write up

    1) POTUS, on August 8th, I advised going long POT @ $30.10, despite having to wait nearly half a year, Uralkali's tentative cartel reformaiton and supply tightness has helped the potash market and allowed POT to recover, earning you 16.2%

    2) Blackberry BBRY, I have been a vocal hater of Blackberry for a while and I guess you could count my hatred and lose advice to short as profit but I never explicitly said it so I won't count that. On November 5th, I gave a HOLD recommendation, on December 23rd, I issued a BUY recommendation at thr $7.10 mark, following this advice you made 21%

    3) Pandora (A/S). I have been a long term holder but never put detailed research on SA as it isn't worth my time considering lack of readership. I have it on SCRIBD and if anyone wants the link on why there is another 30-50% here, let me know. Anyway, I advised that the sell off (due to Bangkok violence) was ill-informed and added to my position about 300DKK. The stock has since pre-released and upgraded earning you 6.6%

    4) Best Buy (NYSE:BBY)...This is annoying, I tried to tell people to buy on the open on the profit warning. My message never got through for some reason. I won't chalk it up to anything but clearly it would have been a winner.

    Sorry I haven't been more active, I am concentrating on more mid cap Europe and I felt that this research would have been of limited use to you all. If you want to ask for my picks, let me know!

    Last review (Should I have held in brackets)

    Followed me on...

    ...Nokia, you made 37% (YES!!!)

    ...K+S you made 23% (YES!!!)

    ...Dialog you made 30.5% (YES!!!)

    ...Infineon, you made 17% (YES!!!)

    ...Tesla, you made 3.5% (NO!!!)

    ...Potash Corp, you lost 0.5% (HELD ANYWAY)

    Tags: Performance
    Jan 17 3:42 AM | Link | 2 Comments
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  • $GPRO - Will close the short out here. Heavy volume persisting. $43.90. +5.5% Profit
    Jul 16, 2014
  • $GPRO - indicating $42.77. If volume hasn't returned to normal, I advice taking profits with max 44.5 cover ($46.5 initial short)
    Jul 16, 2014
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