My 29 stocks for 2024

Disclaimer: This is not investment advice. The author is long the shares mentioned in this article which has been written for entertainment purposes only. He may buy or sell shares at any time without notification. Views expressed by be biased and / or wrong. Do not rely on this article when taking financial decisions.

I have mentioned numerous times that the Valueandopportunity blog has been a great learning experience and an inspiration for me. It is absolutely amazing that its author has managed to publish high-quality investment content for 13 years - and thanks to the internet we can read it all for free. Among my favourite regular sections of the blog, the “investments for the next year” rank very high. This normally appears at the end of each year and gives the full portfolio including a few lines on each stock (see here for the 2023 edition and here for the brand new one for 2024). Since I enjoy this section so much, I decided to copy the idea for my portfolio and hope readers will find it useful, even though I will not be able to match the V&O standard - my positions are younger and less boring. It may also be helpful for myself to see where the portfolio stands at this point and identify higher- versus lower conviction ideas. As I am not confident nor smart enough to be concentrated in 5 o 6 names, there is quite a lot to cover. Also, this post will not replace the 2023 performance review which will come up after my skiing holidays in January. I was quite confused to see a number of younger investors so excited on Twitter that they urgently had to share their 2023 number before the hoidays. I grant them all their success, but to me, this is greenhorn behaviour which I will not participate in. So let’s go. The positions are roughly ordered by portfolio weight:.

1 - Compagnie de L’Odet

Odet has been in my portfolio since the beginning and I have written about it here and here). The family owned holding company includes a complex network of entities which seems quite confusing and at first glance may justify to 65% discount to SOTP. However, shareholder-friendly activities are happening with the sale of certain divisions, share repurchases and spin-offs happening. The most valuable asset is a participation in UMG, in my view a defensive and moaty business

2 - Fairfax Financial

Also a position held from the start in spring 2022, Fairfax is a multinational insurance group with activities around the globe and a very interesting equity portfolio. Over the years, they have had the guts to do things differently, leading a creative and largely successful capital allocation. The insurance operations have consistently produce combined ratios around 95% (this may change in bad years) and the company played the rates cycle well with higher rates likely to produce significant interest income. Stock trades at 6x my estimate of 2023 earnings. I have not done a write-up but a great compendium in Fairfax is here.

3 - Italmobiliare SpA

Italmobiliare like Odet is a family-controlled holding company and it is a new investment of 2023 for me. Its assets are mostly private investments in Italy, with the “flagships” of Caffe Borbone and Oficina Profumo die SAnta Maria Novella but also some other interesting operating companies. Italmobiliare appears pretty cheap based on the assets, in particular if these continue to perform well. I have not done a write-up myself, but this one from V&O is a good starting point. Interesting topic to watch is what the company will do with incoming cash and how they will handle the exit process for their portfolio going forward.

4 - Brodrene A&O Johansen

One of my largest position is this Danish supplier of technical installation materials for repairs, renovation and maintenance. This is a distribution company which has grown nicely over the years and earned good returns on capital on the way. There was a weakening over the last quarters, linked to the slump in construction activity. Still, I this the core is strong and am planning to hold this for some time.

5 - Millicom

Latin American telecom company which has been on a losing streak for quite some time and continuously disappointed expectations. However, the recent performance has stabilized and improved and there are continued buyout rumours as French billionaire Xavier Niel has kept on adding to his position. He may reach the 30% threshold at some point at which point he may need to offer to buy out all the shareholders. Millicom at this point is a lower-conviction position, so I recently trimmed from ~4.5% to 3.5% .

6 - DCC plc

DCC is a distributor of energy and healthcare products, mostly in the UK and Ireland, but also expanding across continental Europe. The company is relatively boring but has delivered consistent growth, margins and capital returns. Once again, V&O is a good source if you want to start looking into the business. The company enjoyed a nice run-up in H2 2023 but I still think it is not expensive and am planning to hold for some time.

7 - WeConnect

WeConnect is a fairly small French IT distribution business. The company is run by the majority shareholders and has built a fairly impressive track record after growing revenues at stable margins for some time. Yet, WeConnect has so far not received much love in the market and trades at P/E and EV/EBIT ratios around 4-5. I am hoping for continued operating success and that the market will notice it at some point.

8 - Donnelley Financial Solutions

DFIN is active in facilitating company filings, compliance services retling to capital markets and merger activity. This is a Picks and Shovels business for US capital markets which I hope will continue to grow over time. More and more of this business is now teck-based and DFIN has developped some nice and high-margin SaaS activities. While I fundamentally think it is a good business to own, the price has run up a lot in 2023 even though the results were not particularly great during this year, so this has become more expensive and I amy consider trimming the position.

9 - IDT Corp

IDT is company that has traditionally provided international telecommunication services. Over the years, founder Howard Jonas has used the cash flow to incubate and build various new businesses, many of which have been spun, making IDT a serial spinner. In 2023, the company successfully concluded a litigation case, hopefully clearing the way for more spin-off activity. They currently have three candidates. I am planning to stick around and wait if the dynamic unfolds.

10 - Funkwerk AG

In my view a German “hidden champion” in the sector of train and rail communication. Potential beneficiary from upcoming investments in railroad infrastructure across Europe. Experienced management, high returns on capital, potential drawback is the majority owner Hörmann whose intentions might not be clear. Write-Up is here .

11 - Burford Capital

Burford Capital is an alternative asset manager and provider of Legal Finance. The company buys litigation cases and either argues them in court or settles them. In my view, this is an interesting business model which, if done well may achieve high and uncorrelated returns. Burford is the biggest company in this emerging sector. They recently won a title against Argentina in the YPF case and are currently looking to negotiate a settlement with the new Millei government. Depending on the outcome, this settlement alone may justify the current market cap - yet I believe they may have more interesting cases in their portfolio, so I am planning to hold this for a longer time. Best way to get up to speed with Burform may be the YAV Podcasts with Artem Fokin (Part 1, Part 2, Part 3)

12 - Legal & General

UK-based market leader in the sector of pension risk transfer which I consider a growth-business in the insurance sector. Operations also include life insurance and asset management and I think the company has an edge in sourcing certain types of assets. L&G has generated excellent capital return over the years and paid out most of them to shareholders while the stock price has hardly moved. New CEO incoming in 2024.

13 - Nilorngruppen

Sweden-based producer of fashion labels which I wrote up earlier this year. I called the company a cyclical compounder with the business growing and achieving high capital returns over time, but not every year. Their edge is in being able to design and produce for a client-base they have served for a long time. So I think at least a long-term mindset may be needed here, due to the cycles of the industry. Excellent investor reporting.

14 - Sixt SE (Pref)

German car-rental company which is owner-operated by the founding family. After a fantastic 2022, 2023 looks sligthly weaker but still strong. Sixt has been a growth-story for years and it currently tackling the US market which however is a challenging target. Also, the company somewhat relies on the used-car market and the business is cyclical so I will need to watch the developments closely.

15 - Delfi

Delfi is a Singapore-listed producer and distributor of chocolate products, mostly in Indonesia where the company is in a market-leading position. The company owns strong brands and a valuable distribution network in the fourth-most populous country on earth with a growing middle-class. Delfi over the last 3 years showed strong growth and has been earning excellent capital returns even though the most recent quarter was a bit weaker. Delfi is trading at an EV/EBIT close to 6x and may well be an interesting takeover target for the likes of Nestle, Unilever or Mondelez at some point. Very comfortable here, looking to hold this for longer.

16 - Liquidia

Liquidia entered the portfolio in September and October as a legal special situation. The company has a developped a drug for the treatment of pulmonary arterial hypertension (PAH) which was ok’ed by the FDA but its commercialization was blocked based on alleged patent infringement. Just before the holidays, Liquidia got a favourable ruling and the share price jumped. While I think that a successful commercialization is not in the price yet, the main catalyst has played out and given that I know where little about pharma or biotec, I may take some profits in early 2024.

17 - Thermador

French distributor of products for heating, plumbing, ventilation (pumps, tabs,…). Thermador operates as a roll-up and has acquired >20 companies over the years. The holding has a pretty unique operating structure of granting each company a large degree of independence which has resulted in steadily rising profits and strong returns on capital. I had watched Thermador for some time and managed to bottom-fish some in October, some 20% below the current price. Planning to hold this position for a long term and may add on weakness.

18 - Ibersol

Ibersol operates fast-food restaurants in Portugal and Spain. After having been hit hard by Covid and selling their Burger King Franchise in late 2022, the company paid down debt, paid special dividend yet is still running KFC, PizzaHut, Pans&Co and other restaurants and is returning to growth mode. The majority-owners operate the company and have a lot of experience. I am comfortable with the position but will need to reevaluate the prospects in the next coupe of months.

19 - Spirit Airlines

Spirit is a US ultra low cost carrier which is in the process of being taken over by JetBlue. The merger was challenged by the US DOJ for being anticompetitive and harming the customer. The court negotiation was concluded in early December and a judgement is expected for January. In my view, which may be wrong, the merger has a >60% to go through and I also think it is unlikely the cash acquisition price will be cut. On the other hand, Spirit’s financials have been gloomy recently and the company may be in trouble if the merger breaks which is explains a >40% discount to the acquisition price. While I owned options in the past, I reshuffled to position and currently own shares only.

20 - Hortico

Hortico is another distributor in my portfolio. It is focused on horticulture products, but also fertilizers, plant protection products etc. This is a tiny company with illiquid shares which got a good boost in growth from 2019-22 but is having a slower year in 2023. Still, I see the company holds some net cash, trades at 3.5x EBIT and also has some growth potential. So I am planning to hold this and watch how it develops.

21 - Delek US Holdings

Delek Holdings is a US midstream energy business and a sum-of-the parts story. They own a majority in publicly listed Delek Logistics Partners (DKL), an MLP which owns Pipelines, Terminals etc. The DKL stake largely covers the market cap of the entire company which also owns 4 refineries and ~250 gas stations in the South of the US. Management is relatively new and has mentioned its commitement to highlighting the value of the various assets and to be, a spin-off could be in the cards. I may do a longer write-up on DK and potentially add here.

22 - Logistec

Logistec is an owner and operator of logistics terminals in the Great Lakes region, listed in Canada. The company is being acquired by Blue Wolf Capital and has received all the approvals. With deal closing expected around 8 January, Logistec may well be the first company to leave the portfolio in 2024.

23 - Eurotel

Eurotel is a Polish company which runs retail stores for products of Apple, T-Mobile and Canal+. They also engage in B2B business largely registring, configuring, servicing Apple products. The company has consistently profitable and achieved high returns over the past 10 years but slowed down in 2023. I think the effect is short-term after a very strong 2022 and they will recover to earlier levels. Yet, if there was a structural issue with Apple, they would certainly feel some pain. Holding and watch this one.

24 - United Internet

United Internet, founded and led by Ralph Dommermuth is of in few successful German tech companies. Active in “Access” and “Applications”, United owns a 5G License for Germany but recently struggled to build its network. There are signs that this is improving while the “Applications” segment has always been a cash cow and is showing growth again. United Internet has recovered from its lows, but still has some way to go here so I am planning to remain invested.

25 - Nintendo

Nintendo is a fairly new and so far small position for me. I am currently learning more about the business but I it has a few interesting features including significant IP and brand power (everyone knows Mario and Pokémon), an tech ecosystem around the Switch, a web of cross-holdings and a shift in capital allocation towards becoming more shareholder-friendly. I am still learning more, but may add to the position next year.

26 - Sio Gene Therapies

I still own my small position in my “self liquidating” special situations bucket. While I would have expected for the liquidation to go ahead some time ago, I have kept the position and am planning to just wait for it to go away.

27 - Albertson’s

Small merger arb position of since the company announced to be taken over by Kroger’s. Merger is expected to be challenged and go to court, we should know in Q1 if this happens. Company has addressed competition concerns by divesting stores. If the merger just goes through, I may pocket a small gain, otherwise I may sell or add.

28 - iRobot

Like Albertson’s a merger arb case given the pending acquisition by Amazon. I think antitrust concerns here are fairly ridiculous but then any acquisition Amazon proposes is likely to get challenged. Price was recut lower in the past and iRobot on its own looks fairly ugly, so big downside if it breaks.

29 - Capri

In the merger arb position, I also do own atiny position in this fashion brands company (“Versace”, “Michael Kors”) which is about to be acquired by Tapestry (“Coach New York”). The merger may be challenged by the respective authorities but I find it an interesting setup and the spread wide enough to justify a small position. I am also planning to do post on how I think about merger arb these days