Hanseatic Championship - Finals
- HanseaticHunter
- Jul 5, 2021
- 3 min read
Updated: Jul 9, 2021
Quest for top equity investments
We have reached the finals of the Hanseatic Championship. Just as the Euro 2020 reaches its sporting climax this week, we will pronounce our winners as Hanseatic Champions throughout this week.
It is our quest to determine the best equity investments from our Hanseatic universe. Here is the overview of how 400 candidates became 13 finalists:
Qualification (ca. 400 stocks) by country --> completed May 7
Round 1 (241):
1st: Solid Growth / Consumer (40) --> completed May 17
2nd: Solid Growth / Industrials & Materials (34) --> completed May 21
3rd: Solid Growth / Health Care (20) --> completed May 25
4th: Solid Growth / Technology (27) --> completed May 27
5th: Turnaround / Consumer & Technology (16) --> completed May 28
6th: Turnaround / Industrials & Materials (34) --> completed May 30
7th: Highflyer / Consumer, incl. fintechs (18) --> completed June 1
8th: Highflyer / Health Care (17) --> completed June 3
9th: Highflyer / Technology, incl. industrials (34)--> completed June 4
Round 2 (119):
Solid Growth (64) --> completed June 16
Turnaround (23) --> completed June 18
Highflyer (32) --> completed June 21
Quarterfinals (60):
Solid Growth (32) --> completed June 24
Turnaround (11) --> completed June 25
Highflyer (17) --> completed June 25
Semifinals (30):
Solid Growth (15) --> completed June 30
Turnaround (5) --> completed July 2
Highflyer (10) --> completed July 2
Finals (13)
As we declared at the very beginning, our goal is to have between three to nine champions, i.e. at least one and at most three per category. So, how does a company win the final to become a Hanseatic Champion?
Investors love a unique story. However, it can become a typical behavioral trap when the “story” comes first at the beginning of the investment evaluation. The great danger is then to frame all other considered factors to fit the “story” or to miss red flags and other risks.
For us the key is not only to discover a great company (business model, management, etc.), but to ascertain whether the stock has potential beyond what the market currently expects. Our "fusion investing" approach solves this challenge. This helps us to avoid the common fallacy of falling in love with an investment case. For example, ASML, probably the best semiconductor equipment company in the world, made it into the knock-out stage, but was just too perfect. It was eliminated in the quarterfinal. This was not a valuation call and maybe they will continue to perform, but the stock has become vulnerable to setbacks when the positive sentiment can no longer expand.
In the final, we review every previous step in order to obtain a complete picture of the stock. This is not a scoring system, but a multi-step disciplined process at the end of which we attempt to find a couple of qualitative catalysts that should make the stock move. Here are the 13 finalists:
"Solid Growth"
Dometic/S (caravan equipment)
MCap €4.7bn, EV €5.3bn
3-year trend growth estimate p.a.: sales +11%, operating profit +19%
Current year valuation: EV/sales 2.7x, EV/operating profit 14x
Zalando/D (online fashion)
MCap €25.9bn, EV €24.5bn
3-year trend growth estimate p.a.: sales +20%, operating profit +20%
Current year valuation: EV/sales 2.4x, EV/operating profit 35x
Acomo/NL (soft commodities)
MCap €0.7bn, EV €0.9bn
3-year trend growth estimate p.a.: sales +na%, operating profit +na% (recent big acq)
Current year valuation: EV/sales 0.8x, EV/operating profit 12x
ALK-Abello/DK (allergy drugs)
MCap €4.5bn, EV €4.6bn
3-year trend growth estimate p.a.: sales +11%, operating profit +40%
Current year valuation: EV/sales 8.9x, EV/operating profit 80x
Adesso/D (IT services)
MCap €0.9bn, EV €0.9bn
3-year trend growth estimate p.a.: sales +15%, operating profit +15%
Current year valuation: EV/sales 1.4x, EV/operating profit 9x
“Turnaround”
Pandora/DK (jewelry)
MCap €11.5bn, EV €11.8bn
3-year trend growth estimate p.a.: sales +9%, operating profit +16%
Current year valuation: EV/sales 4.0x, EV/operating profit 12x
Sixt/D (car rental)
MCap €4.6bn, EV €6.4bn
3-year trend growth estimate p.a.: sales +29%, operating profit +43%
Current year valuation: EV/sales 3.1x, EV/operating profit 9x
Sandvik/SWE (machine tools/mining)
MCap €27.3bn, EV €27.3bn
3-year trend growth estimate p.a.: sales +7%, operating profit +17%
Current year valuation: EV/sales 2.9x, EV/operating profit 12x
“Highflyer”
Media&Games/D (gaming)
MCap €0.8bn, EV €0.9bn
3-year trend growth estimate p.a.: sales +25%, operating profit +43%
Current year valuation: EV/sales 3.7x, EV/operating profit 14x
Cellink/SWE (bioprinting)
MCap €2.3bn, EV €2.0bn
3-year trend growth estimate p.a.: sales +35%, operating profit +100%
Current year valuation: EV/sales 21x, EV/operating profit na
Vitrolife/SWE (fertility)
MCap €4.1bn, EV €4.0bn
3-year trend growth estimate p.a.: sales +15%, operating profit +20%
Current year valuation: EV/sales 26x, EV/operating profit 63x
SFC Energy/D (fuel cells)
MCap €0.4bn, EV €0.4bn
3-year trend growth estimate p.a.: sales +38%, operating profit +82%
Current year valuation: EV/sales 6.1x, EV/operating profit 74x
Sinch/SWE (communications interface).
MCap €9.9bn, EV €10.7bn
3-year trend growth estimate p.a.: sales +45%, operating profit +58%
Current year valuation: EV/sales 7.1x, EV/operating profit 72x
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