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mjohn707
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mjohn,

 

I agree with you that Greece is one of the most interesting markets these days. Thank you for posting the Flexopack idea, I will take a look at that.

 

I do own some shares of Autohellas which operates the local Hertz network. A company somewhat similar is Eltrak which distributes/services Caterpillar and Firestone/Bridgestone in Greece.

Among the larger cap Greek companies, Metka has the potential to be interesting - they are mainly enginering Gas Plants in all kinds of scary regions (Syria, Algeria...).

 

David Einhorn has been publicly promoting his investments in two Greek banks, Alpha Bank & Piraeus Bank.

 

Would be great to discuss this further.

 

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mjohn,

 

I agree with you that Greece is one of the most interesting markets these days. Thank you for posting the Flexopack idea, I will take a look at that.

 

I do own some shares of Autohellas which operates the local Hertz network. A company somewhat similar is Eltrak which distributes/services Caterpillar and Firestone/Bridgestone in Greece.

Among the larger cap Greek companies, Metka has the potential to be interesting - they are mainly enginering Gas Plants in all kinds of scary regions (Syria, Algeria...).

 

David Einhorn has been publicly promoting his investments in two Greek banks, Alpha Bank & Piraeus Bank.

 

Would be great to discuss this further.

 

I don't think the current valuation of Alpha and Piraerus would interest me at all. Be careful. When he got in, he gets the warrants as well, so it is a different risk/reward.

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mjohn,

 

I agree with you that Greece is one of the most interesting markets these days. Thank you for posting the Flexopack idea, I will take a look at that.

 

I do own some shares of Autohellas which operates the local Hertz network. A company somewhat similar is Eltrak which distributes/services Caterpillar and Firestone/Bridgestone in Greece.

Among the larger cap Greek companies, Metka has the potential to be interesting - they are mainly enginering Gas Plants in all kinds of scary regions (Syria, Algeria...).

 

David Einhorn has been publicly promoting his investments in two Greek banks, Alpha Bank & Piraeus Bank.

 

Would be great to discuss this further.

 

 

Thanks for mentioning Eltrak and Metka, I'll definitely take a look at those.  I looked at autohellas before and I can't remember why I passed on it, but I think I remember something about declining operating income and a good amount of non-operating income.  What's your thinking on it?

 

Also have you ever run into that greek government grant income that shows up in the other income section of the income statement before?

 

 

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So Autohellas is runnig the Hertz franchise in Greece, Bulgaria, Serbia, Cyprus and Montenegro. They have run the franchise in Greece since 1974 and have long-term contracts in place with Hertz. The company is dominated by Theodore Vassilakis, one of the most successful Greek businessman.

 

Looking at the numbers, Hertz has amarket cap of around 102mm EUR and a book value of 177mm EUR, almost all of which is tangible. Like many Greek firms, Autohellas was on expansion course until 2007. Since then, they have reduced their debt financing and their total assets. Gross financial debt peaked at 270mm EUR and is now at 150mm EUR. On the other hand, assets are mostly vehicles Autohellas owns. I have not found their accounting of cars particularly aggressive and to my knowledge, they have not had to impair them even throughout the crisis.

 

Autohellas owns a few participations which I consider non-core, most notably an 11.5% share in Aegean Airlines which is worth around 60mm EUR. Aegean is also controlled by Mr. Vassilakis. I want to underline that I am not fond of airline investments, however a listed asset worth 60% of the market cap is not to be ignored. The "other profit" you have seen may come from appreciation of this share.

 

Autohellas gets their revenues mainly from two sources, corporate clients and tourism. Greece has been experiencing a 1929-type of recession and corporate fleets have been shrinking for some time, so this part of the business has been very difficult. Tourism has come back over the last two years.

 

Over the first nine months of 2014, the posted net earnings of 17 mm EUR (excluding gains from Aegean). Cash Flow was negative as they invested into their fleet. If the economy comes back, I think one can argue for  the car rental business alone to be worth 10x earnings which might be 150-200mm EUR plus the share of Aegean and some smaller non-core assets on top.

 

Though owner-controlled, they have been quite good at paying dividends and returning capital to shareholders.

 

That should be enough to start, happy to answer questions from here.

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Seems like the bottom for the Greek stock market is a way out unless they unexpectedly do find those 180 votes in the coming weeks.

 

It's a real blood in the streets moment for sure.  I think I read that stocks are down 20% for the week and Tuesday's 12% decline was worse than the '87 crash.

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Hmm ... how about Eurobank? Good enough for Wilbur Ross at prices much higher than today :)

 

I really have no clue why people are so excited about these Greek banks. Texas ratio is well over 100 and stock price is 2/3 of tangible book. The risk reward ratio does not justify the investment.

Wilbur Ross has made good and bad investments. His commitment to Eurobank is far less than his commitment to IRE. Look at XCO and SNBC. He didn't do too well on these two.

Everyone has some failures and that's part of the game. Don't blindly follow him.

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Seems like the bottom for the Greek stock market is a way out unless they unexpectedly do find those 180 votes in the coming weeks.

 

It's a real blood in the streets moment for sure.  I think I read that stocks are down 20% for the week and Tuesday's 12% decline was worse than the '87 crash.

 

Correct.

 

I do think the market's reaction is extreme. Did they expect things to be any different in two months? This way, they might actually stand a chance. And if Syriza ultimately wins the early general election, what will actually happen and how? If you look at price action, the market almost seems to think a return to the drachma is quite certain but that is obviously far from true.

 

There is this saying in dutch: "De soep wordt nooit zo heet gegeten, als zij wordt opgediend." Literal translation: "The soup is never eaten as hot as it is served."

In this context it would mean that any measures that are applied would be less severe than what was announced. I don't think Tsipras could actually afford to do most of what he is claiming (at least not so extreme) but I guess that is what politicians do.

 

It's certainly interesting to see how little attention Greece (and it's stocks) gets. But that lower oil (the board's favorite topic lately) should give Europe a nice boost next year! ;)

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Has anyone looked at thessaloniki water (eyaps)?  It's 75% owned by the greek state and it seems to be trading at about 60% of book value and a PE of 7

 

Doesn't look particularly cheap given the chance that you take a serious haircut through currency devaluation. I would also rather not own things that are owned and controlled by the Greek state.

 

In other news:

http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_17/12/2014_545504

 

They better win that last presidential vote on 12/29!

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  • 1 month later...

I was wondering what people are making of the situation in Greece. Things appear to be moving quickly.

 

Situation as I see it:

-Anti-austerity coalition government formed and appointed by radical left Syriza (Tsipras) and right-wing populist Independent Greeks (Kammenos). They have 162 votes in parlament of a total 300 (149+13). It is noteworthy that they formed a government in just one day (fastest coalition-forming I am aware of).

- New finance minister is Yanis Varoufakis, an economic professor. You can read his ideas on his blog: http://yanisvaroufakis.eu/ . Varoufakis is  clearly anti-austerity but not anti-European.

- Everybody stated that they are willing to negotiate even though the euro group/Germany underlined that current contracts are binding ("pacta sund servanda").

- EU commissioner Dimitris Avramopoulos appears to be favourite candidate for the vancant post of president of Greece. This would be a sign of reconciliation and a candidate likely to be elected.

 

What is the perspective from here:

In my view, if politicians are willing to negotiate, the outlook might not be too bleak. Tsipras is clearly not going to get it his way in all respects and heisnot going to keep all he has promised. However, if he changes a few things to the better, there is a chance for him to succeed.

Chances he has are:

- achieving some easing in terms of Greek debt obligations (extensions, lower interest rates)

- securing a European investment program in areas such as infrastructure, creating as European Marshall Plan. These measures might counteract austerity.

- define a path for the exit of the troika which is much-hated in the Greek population.

- cutting corruption

 

In order to achieve these goals in negotiations with the euro group, he may have to sacrifice other promises, in particular hiring a lot of public servants and undo all laws passed by the last government. Tsipras has some leverage after the result but is in no case able to dictate his terms. This situation might help negotiators to achieve a balanced agreement which might end up as a win-win.

 

Market view:

- Greece stock market sharply lower post-election, mainly bank stocks suffering. Greek governtment bond yield increased and the yield curve is heavily inverted (3y bonds at 13%, 10 year bonds at 9.5%), signaling stress in the markets.

- Some Contrarians (notbaly Robert Shiller) calling to buy:

http://www.bloomberg.com/news/articles/2015-01-27/nobel-prize-winning-economist-says-it-s-time-to-buy-greek-stocks

 

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I believe this was one of the better elections outcomes for Greece. Enough power to change something, not enough to dictate. I believe Greece will pull through, especially given ECB stimulus, lower euro (tourism is almost 20% of GDP so added bonus for Greece) and lower oil prices. Short term will be a drag because of uncertainty but longer term things should settle imo. Just my 2 euro cents.

 

The silence on the board surrounding Greek stocks is also telling. Here you have one of the most hated stock markets in the world and almost no one is talking about it. Everyone is swooning over the US at all time highs (even though that is a quality that is present in most years during bull markets and perfectly normal).

 

Shiller was speaking at a media seminar at Barclays Plc to promote asset management firm Ossiam’s new exchange traded fund, which will invest in Europe using Shiller’s CAPE model for identifying long-term under and over valuations of equities.

 

Anyone experience with Ossiam? Seems like an interesting ETF if they keep costs decent.

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The silence on the board surrounding Greek stocks is also telling. Here you have one of the most hated stock markets in the world and almost no one is talking about it. Everyone is swooning over the US at all time highs (even though that is a quality that is present in most years during bull markets and perfectly normal).

 

I agree. But I also think one of the reasons is that it is hard to invest in individual Greek stocks for a lot of investors. The only broker that lets me invest in individual Greek stocks is 'degiro', a Dutch discount broker that I consider too incompetent to deposit a significant sum of money. So there are a couple of names I can't trade at all and for a couple of names I have to trade the extremely illiquid German listings and hope I don't get ripped off - which I don't like either.

 

I'm also not a fan of buying an ETF because I have no clue about how to value most Greek stocks (especially banks). Basically there is a hodgepodge of reasons why I don't have any Greek exposure and that's probably exactly the reason why it will outperform :) .

 

Are there any other names you like / own besides Intralot?

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One aspect to be mentioned which might rightly scare people is the announcement of reversing privatization plans for Piraeus Port Authority. This is clearly negative as more private investment capital is needed in Greece and their efforts so far of selling state-owned companies have been fairly disappointing. This appears unlikely to improve with this government.

 

 

writster, I agree that it is tough to buy certain stocks. I normally buy through limit orders on German exchanges, well aware that I only get filled when the respective specialist can arb me...

 

Long Eurobank (painfully), Autohellas and Metka at this point.

 

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The silence on the board surrounding Greek stocks is also telling. Here you have one of the most hated stock markets in the world and almost no one is talking about it. Everyone is swooning over the US at all time highs (even though that is a quality that is present in most years during bull markets and perfectly normal).

 

I agree. But I also think one of the reasons is that it is hard to invest in individual Greek stocks for a lot of investors. The only broker that lets me invest in individual Greek stocks is 'degiro', a Dutch discount broker that I consider too incompetent to deposit a significant sum of money. So there are a couple of names I can't trade at all and for a couple of names I have to trade the extremely illiquid German listings and hope I don't get ripped off - which I don't like either.

 

I'm also not a fan of buying an ETF because I have no clue about how to value most Greek stocks (especially banks). Basically there is a hodgepodge of reasons why I don't have any Greek exposure and that's probably exactly the reason why it will outperform :) .

 

Are there any other names you like / own besides Intralot?

 

You make some good points, it's a pain for me as well. What do you mean when you hope you don't get riped off when buying German listings? Do you mean in terms of liquidity and spread or are you referring to another risk?

 

I'm only long intralot atm but have been looking at an index ETF, OPAP and Metka. None of them seemed compelling enough until now and haven't done any work on others.

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I believe this was one of the better elections outcomes for Greece. Enough power to change something, not enough to dictate. I believe Greece will pull through, especially given ECB stimulus, lower euro (tourism is almost 20% of GDP so added bonus for Greece) and lower oil prices. Short term will be a drag because of uncertainty but longer term things should settle imo. Just my 2 euro cents.

 

This is the worst and most stupid election outcome I could possibly imagine. Its insanely bad and the Greeks are insanely stupid. The Greeks have literally done nothing in terms of structural reform. And the guy they have elected is a lunatic who has just allied with another lunatic. The Greeks annoy me and I live in Canada. My government hasn't even given them any money. Imagine how much the Germans, Finns and others hate the Greeks. Nothing is going to settle down. This is going to get very very ugly.

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