European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<div>
<h3>Trends</h3>
</div>
<div>
<p>There has been no obvious trend over the last three months regarding the discounts, although it has widened in some names.  Trading opportunities are less obvious, but some still exist.</p>
</div>
<div>
<h3>Recommended trades</h3>
</div>
<div>
<ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/entities/bayerische-motoren-werke-ag" target="_blank" rel="noopener"></a>
<p><a href="https://www.smartkarma.com/entities/bayerische-motoren-werke-ag" target="_blank" data-smartkarma-citation="entities:21591:1" rel="noopener">Bayerische Motoren Werke AG (BMW GR)</a> : the discount has traded sideways since mid-September, and is now 23.2%. I would recommend setting up a trade long BMW prefs, short common shares with a target of a 15% discount.</p>
</li>
<li>
<p><a href="https://www.smartkarma.com/entities/fuchs-petrolub-se" target="_blank" data-smartkarma-citation="entities:21624:1" rel="noopener">Fuchs Petrolub SE (FPE GR)</a> 's premium of preferred shares is a whopping 34.4% currently. Remember that voting rights are valuable. Recommendation: long ords/short prefs, with a 10% target.</p>
</li>
<li>
<p><a href="https://www.smartkarma.com/entities/henkel-ag-co-kgaa" target="_blank" data-smartkarma-citation="entities:21646:1" rel="noopener">Henkel AG &amp; Co KGaA (HEN3 GR)</a> : the premium is 13.0% (down from 15.4% in my September report). I would set up a trade long prefs/short common shares with a 10% premium target.</p>
</li>
<li>
<p>Voting rights are valuable in a company like <a href="https://www.smartkarma.com/entities/volkswagen-ag" target="_blank" data-smartkarma-citation="entities:21738:1" rel="noopener">Volkswagen (VOW GR)</a> , so a 5.8% discount of the prefs. seems about right. It has moved sideways since mid-September.  If you believe that the higher liquidity of the prefs will, at some point, mean that the discount will close, then a long prefs/short ords may be an option; plus it can be executed in size. The discount tightened since the March selloff and has been moving within a tight range. </p>
</li>
<li>
<p>A 35.9% discount of <a href="https://www.smartkarma.com/entities/danieli-c-officine-meccanich" target="_blank" data-smartkarma-citation="entities:21177:1" rel="noopener">Danieli &amp; C Officine Meccanich (DAN IM)</a> savers (vs. 37.5% in September and 39% in June) seems still too wide, and low liquidity does not help. I keep on recommending long savers/short ordinaries. A 30% discount is not a demanding target.</p>
</li>
<li>
<p><a href="https://www.smartkarma.com/entities/grifols-sa" target="_blank" data-smartkarma-citation="entities:21274:1" rel="noopener">Grifols SA (GRF SM)</a> B shares are trading at a 37.9% discount (vs. 41.9 by mid-September), there is a trend towards the tightening of this discount since mid-March. The discount in Grifols B shares has averaged 28% since listing of the B shares in February 2016. I recommend setting up the trade long B shares traded on Nasdaq, short A shares traded in Madrid. The target is a 27% discount. Please note there is FX risk, which can be hedged.</p>
</li>
<li>
<p>The current discount in <a href="https://www.smartkarma.com/entities/atlas-copco-ab" target="_blank" data-smartkarma-citation="entities:22282:1" rel="noopener">Atlas Copco AB (ATCOA SS)</a> B shares vs. A shares is 13.2%. I recommend setting up Long B shares/short A shares, with a target of &gt;10% discount.</p>
</li>
<li>
<p>The discount in the <a href="https://www.smartkarma.com/entities/telefonaktiebolaget-lm-ericsso" target="_blank" data-smartkarma-citation="entities:22354:1" rel="noopener">Telefonaktiebolaget Lm Ericsso (ERICB SS)</a> (Ericsson) B shares has tightened since my July recommendation: from 8.7% to 6.8%. I would keep the trade on with a 3% discount target.</p>
</li>
<li>
<div>
<p>The discount in <a href="https://www.smartkarma.com/entities/schroders-plc" target="_blank" data-smartkarma-citation="entities:22134:1" rel="noopener">Schroders PLC (SDR LN)</a> is now 32.7% (vs. 27% by mid-September). I would set up long non-voting/short voting shares.</p>
</div>
</li>
</ul>
<p>Please read on for table and charts.</p>
</div>


Trends


There has been no obvious trend over the last three months regarding the discounts, although it has widened in some names.  Trading opportunities are less obvious, but some still exist.


Recommended trades





Bayerische Motoren Werke AG (BMW GR) : the discount has traded sideways since mid-September, and is now 23.2%. I would recommend setting up a trade long BMW prefs, short common shares with a target of a 15% discount.


Fuchs Petrolub SE (FPE GR) 's premium of preferred shares is a whopping 34.4% currently. Remember that voting rights are valuable. Recommendation: long ords/short prefs, with a 10% target.


Henkel AG &amp; Co KGaA (HEN3 GR) : the premium is 13.0% (down from 15.4% in my September report). I would set up a trade long prefs/short common shares with a 10% premium target.


Voting rights are valuable in a company like Volkswagen (VOW GR) , so a 5.8% discount of the prefs. seems about right. It has moved sideways since mid-September.  If you believe that the higher liquidity of the prefs will, at some point, mean that the discount will close, then a long prefs/short ords may be an option; plus it can be executed in size. The discount tightened since the March selloff and has been moving within a tight range. 


A 35.9% discount of Danieli &amp; C Officine Meccanich (DAN IM) savers (vs. 37.5% in September and 39% in June) seems still too wide, and low liquidity does not help. I keep on recommending long savers/short ordinaries. A 30% discount is not a demanding target.


Grifols SA (GRF SM) B shares are trading at a 37.9% discount (vs. 41.9 by mid-September), there is a trend towards the tightening of this discount since mid-March. The discount in Grifols B shares has averaged 28% since listing of the B shares in February 2016. I recommend setting up the trade long B shares traded on Nasdaq, short A shares traded in Madrid. The target is a 27% discount. Please note there is FX risk, which can be hedged.


The current discount in Atlas Copco AB (ATCOA SS) B shares vs. A shares is 13.2%. I recommend setting up Long B shares/short A shares, with a target of &gt;10% discount.


The discount in the Telefonaktiebolaget Lm Ericsso (ERICB SS) (Ericsson) B shares has tightened since my July recommendation: from 8.7% to 6.8%. I would keep the trade on with a 3% discount target.



The discount in Schroders PLC (SDR LN) is now 32.7% (vs. 27% by mid-September). I would set up long non-voting/short voting shares.



Please read on for table and charts.


Liquid Universe of European Ordinary and Preferred Shares: October Report

<p>With this report, I continue the monthly series on some of the main European holding companies that I deem interesting to long/short clients.</p>
<p>The discounts to NAV of Swedish holdings have considerably tightened. It is time to unwind, and wait for the discounts to widen before setting up the trades again.</p>
<p>The most compelling situations in this report are GBL and Unilever.</p>

With this report, I continue the monthly series on some of the main European holding companies that I deem interesting to long/short clients.
The discounts to NAV of Swedish holdings have considerably tightened. It is time to unwind, and wait for the discounts to widen before setting up the trades again.
The most compelling situations in this report are GBL and Unilever.

Selected European Holdcos and DLCs: September Report

<p>With this report, I continue the monthly series on some of the main European holding companies that I deem interesting to long/short clients.</p>
<p>All the discounts to NAV have remained stable, with no major changes to the holdcos portfolios, with the exception of Kinnevik. Most represent an attractive entry point from fundamentals, in my view.</p>
<p>I note there have been market rumours about a combination of Unilever and Reckitt Benckiser. Certainly, a collapse of the DLC structure would allow Unilever to offer own shares as a currency in M&amp;A.</p>
<p>The most compelling situations in this report are:</p>
<ul>
<li>GBL</li>
<li>Heineken</li>
<li>Investor AB</li>
</ul>
<p>Please read on for charts and comments.</p>

With this report, I continue the monthly series on some of the main European holding companies that I deem interesting to long/short clients.
All the discounts to NAV have remained stable, with no major changes to the holdcos portfolios, with the exception of Kinnevik. Most represent an attractive entry point from fundamentals, in my view.
I note there have been market rumours about a combination of Unilever and Reckitt Benckiser. Certainly, a collapse of the DLC structure would allow Unilever to offer own shares as a currency in M&amp;A.
The most compelling situations in this report are:

GBL
Heineken
Investor AB

Please read on for charts and comments.

Selected European Holdcos and a DLC: July Report

<p style="text-align: justify;">Industrivärden's attractiveness is the <strong>stability of its portfolio and the easiness to hedge the main assets</strong>.</p>
<p>As of 30 June 2020, listed assets represented 99% of Industrivärden´s portfolio.</p>
<ul class="">
<li>Industrivärden does not actively trade its portfolio.</li>
<li>Over the last five years, Industrivärden has outperformed the Stockholm Stock Exchange main index, OMX 30, despite the low turnover of the investment portfolio.</li>
</ul>
<p>Industrivärden has consistently grown its NAV over the last five years while progressively reducing its debt and increasing its rating. Industrivärden has also beaten the main index of the Stockholm's market since 30 June 2020.</p>
<p><em><strong>Industrivärden C shares are trading at a 12.6% discount to NAV</strong> (13.7% in the initiation report in May) vs. an 11.8% average for the last five years</em>, and 10.7% for the last 365 days. The discount recently widened as a result of the corona virus crisis, to a recent high of 14.7% on 7 July. It traded as low as 3.4% on 7 April.</p>
<p>If and when markets stabilise, I expect the current discount to narrow, and therefore recommend a trade <strong>Long Industrivärden C/Short main listed assets, with a 9%</strong> <strong>target</strong>.</p>
<p>Please read further for details, such as company organisation and strategy, taxation on Swedish holdings and hedge calculations.</p>

Industrivärden's attractiveness is the stability of its portfolio and the easiness to hedge the main assets.
As of 30 June 2020, listed assets represented 99% of Industrivärden´s portfolio.

Industrivärden does not actively trade its portfolio.
Over the last five years, Industrivärden has outperformed the Stockholm Stock Exchange main index, OMX 30, despite the low turnover of the investment portfolio.

Industrivärden has consistently grown its NAV over the last five years while progressively reducing its debt and increasing its rating. Industrivärden has also beaten the main index of the Stockholm's market since 30 June 2020.
Industrivärden C shares are trading at a 12.6% discount to NAV (13.7% in the initiation report in May) vs. an 11.8% average for the last five years, and 10.7% for the last 365 days. The discount recently widened as a result of the corona virus crisis, to a recent high of 14.7% on 7 July. It traded as low as 3.4% on 7 April.
If and when markets stabilise, I expect the current discount to narrow, and therefore recommend a trade Long Industrivärden C/Short main listed assets, with a 9% target.
Please read further for details, such as company organisation and strategy, taxation on Swedish holdings and hedge calculations.

Industrivärden (INDUC SS) NAV Recovery and Small Portfolio Adjustments

<h3><strong>Trends</strong></h3>
<p>The general trend of the last month has been a reduction of the premiums and tightening of the discounts. Some of the previous (May and June)recommendations have been bang on. Trading opportunities are less obvious, but some still exist.</p>
<h3><strong>Recommended trades</strong></h3>
<ul>
<li>
<a href="https://www.smartkarma.com/entities/bayerische-motoren-werke-ag" target="_blank" data-smartkarma-citation="entities:21591:1" rel="noopener">Bayerische Motoren Werke AG (BMW GR)</a> exhibited a trend towards a reduction of the discount of preferred shares. Now the discount is 24%, as a result of recent volatility. I would recommend setting up a trade<span class="apple-converted-space"> </span><strong>long BMW prefs, short ords</strong> with a target of a 12% discount.</li>
<li>
<a href="https://www.smartkarma.com/entities/fuchs-petrolub-se" target="_blank" rel="noopener">Fuchs Petrolub Se (FPE GR)</a> 's premium seems to vary within a range, which is probably liquidity related. It is 23.7% currently. Remember that voting rights are valuable. The recommendation is setting up <strong>long ords/short prefs</strong>, with a 10% target.</li>
<li>
<a href="https://www.smartkarma.com/entities/henkel-ag-co-kgaa" target="_blank" rel="noopener">Henkel AG &amp; Co Kgaa (HEN3 GR)</a> shows a long-term trend towards a reduction of the premium of the preferred shares. The premium is 12.9%. I would set up a trade long prefs/short common shares with a 10% discount target.</li>
<li>
<a href="https://www.smartkarma.com/entities/grifols-sa" target="_blank" rel="noopener">Grifols SA (GRF SM)</a>. Grifols B shares are trading at a 37% discount (vs. 38% in the last report), there is a trend towards the tightening of this discount since mid-March. The discount in Grifols B shares has averaged 26.7% over the last four years. I recommend setting up the trade<span class="apple-converted-space"> </span><strong>long B shares traded on Nasdaq, short A shares traded in Madrid</strong>. The target is a 27% discount. Please note there is FX risk, which can be hedged.</li>
<li>There is an 8.7% discount in Ericsson B shares (<a href="https://www.smartkarma.com/entities/telefonaktiebolaget-lm-ericsso" target="_blank" data-smartkarma-citation="entities:22354:1" rel="noopener">Telefonaktiebolaget Lm Ericsso (ERICB SS)</a> ). Setting up long B shares, short A shares seems tempting.</li>
</ul>
<p>Please read on for table and charts.</p>

Trends
The general trend of the last month has been a reduction of the premiums and tightening of the discounts. Some of the previous (May and June)recommendations have been bang on. Trading opportunities are less obvious, but some still exist.
Recommended trades


Bayerische Motoren Werke AG (BMW GR) exhibited a trend towards a reduction of the discount of preferred shares. Now the discount is 24%, as a result of recent volatility. I would recommend setting up a trade long BMW prefs, short ords with a target of a 12% discount.

Fuchs Petrolub Se (FPE GR) 's premium seems to vary within a range, which is probably liquidity related. It is 23.7% currently. Remember that voting rights are valuable. The recommendation is setting up long ords/short prefs, with a 10% target.

Henkel AG &amp; Co Kgaa (HEN3 GR) shows a long-term trend towards a reduction of the premium of the preferred shares. The premium is 12.9%. I would set up a trade long prefs/short common shares with a 10% discount target.

Grifols SA (GRF SM). Grifols B shares are trading at a 37% discount (vs. 38% in the last report), there is a trend towards the tightening of this discount since mid-March. The discount in Grifols B shares has averaged 26.7% over the last four years. I recommend setting up the trade long B shares traded on Nasdaq, short A shares traded in Madrid. The target is a 27% discount. Please note there is FX risk, which can be hedged.
There is an 8.7% discount in Ericsson B shares (Telefonaktiebolaget Lm Ericsso (ERICB SS) ). Setting up long B shares, short A shares seems tempting.

Please read on for table and charts.

Liquid Universe of European Ordinary and Preferred Shares

Sweden

Industrivarden AB is an investment company.  The Company's holdings consists of a portfolio of listed Nordic industrial companies.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Industrivarden AB (INDUA SS)

Liquid Universe of European Ordinary and Preferred Shares: October Report

No clear trend over the last three months regarding discounts. Some ords/prefs trades/situations to watch: BMW, Fuchs Petrolub, Henkel, Volkswagen,...

Jesus Rodriguez Aguilar

Selected European Holdcos and DLCs: September Report

With this report, I continue the monthly series on some of the main European holding companies that I deem interesting to long/short clients.

Jesus Rodriguez Aguilar

Selected European Holdcos and a DLC: July Report

With this report, I continue the monthly series on some of the main European holding companies that I deem interesting to long/short clients. All...

Jesus Rodriguez Aguilar

Industrivärden (INDUC SS) NAV Recovery and Small Portfolio Adjustments

Industrivärden's attractiveness is the stability of its portfolio and the easiness to hedge the main assets. As of 30 June 2020, listed assets...

Jesus Rodriguez Aguilar

Liquid Universe of European Ordinary and Preferred Shares

Trends The general trend of the last month has been a reduction of the premiums and tightening of the discounts. Some of the previous (May and...

Jesus Rodriguez Aguilar

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)