Pegasus One

Gianluca De Sanctis

Performance

  • -0.5 %
    since 2018-01-15
  • +21,2 %
    1 Jahr
    -0,22 %
    Heute
    -9,0 %
    Max Verlust (bisher)
    0,5x
    Risiko-Faktor
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Trading Idea

Pegasus One follows a value approach. It aims at identifying undervalued stocks and, if possible, an event that is likely to unlock value. The trigger can be e.g. a technical/chart patterns showing positive momentum or/and a new product launch of the company and/or a restructuring story. The firms in the portfolio should have a valid product offering with a durable competitive advantage as expressed by solid existing or potential returns on invested capital.
The portfolio is largely US & Europe focused, but it is not limited to these markets - opportunities are to be found across all the world’s equity markets. Nor is there any sector focus, although a portfolio consisting e.g. of technology stocks only is highly improbable.
The goal of the strategy is to lower risk by selecting undervalued securities. Pegasus One shall keep portfolio turnover very low. The holding period of each investment varies but should be at least 1 year.
No active effort is made to manage volatility other than having some degree of diversification in terms of numbers of stocks. Ideally the portfolio holds 25-30 names, but a larger number of investments is possible. The primary goal is to achieve high returns by selecting mispriced securities and by lowering transaction costs to a minimum. show more
Master data
Symbol
WF00PEGONE
Date created
2018-01-15
Index level
High watermark
108.3

Rules

wikifolio labels

Investment Universe

Trader

Gianluca De Sanctis
Registered since 2017-02-25

Decision making

  • Technical analysis
  • Fundamental analysis

Comments

Comment

I have replaced a lower conviction investment – Citibank Inc - with higher conviction investment.  Financial stocks have already staged a big recovery since the 2009 and while there’s upside potential to the share price, other investment opportunities have emerged that simply offer a better risk-return trade-off. One of these opportunities is Coty Inc, listed on the NYSE, “Coty's executive offices are located in London.  The Consumer Beauty, Luxury, and Professional Beauty divisions are headquartered in New York City, Paris, and Geneva, respectively” (Wikipedia).  After the acquisitions of business units from P&G in 2015-2016, the firm has been struggling to integrate them with existing operations.  Synergies have not materialized, yet.  Goodwill on the balance sheet is significant and so is the firm’s leverage.  Not surprisingly Coty’s share price has gone south, but the firm has launched initiatives to turn the ship around.  Return on invested capital – and operating cash flows - will have to increase for debt levels to come down over time. Major shareholder JAB Investments, which controls roughly 40% of the firm’s shares, is likely to put its resources to work to make this turnaround a success.

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Comment

Aryzta is the Black Swan in the portfolio.  It has lost roughly 90% of its initial purchase price and thus can only be classified as a disastrous investment.  I could not have imagined that the firm would attempt to raise new capital from existing shareholders by offering new shares at CHF 1 a share the same day its shares traded on the markets for well above CHF 6.  This clearly was a very bad investment decisions and while everybody makes mistakes, but the most inexcusable error would be not to learn from these mistakes.  Consequently, I will go back to the drawing board and try understand what went wrong.  

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Comment

GE’s story in recent times could almost be classified as a comedy if the firm did not shed billions of dollars in market value. The firm seems not to be able to clean up the ship. Flannery was probably not fast enough to come to grips with GE’s problems.  So, the board decided to give it another try with yet another CEO within a year, H. Lawrence Culp, one of GE’s board members. His tenure at Danaher bodes well for the task at hand, the consensus among investors seem to suggest.  

On the day of the announcement, GE also wiped USD 20 billons worth of goodwill off the balance sheet and gave a profit warning as well.  But it didn’t matter.  Hopes for a faster turnaround than so has transpired are high on Wall Street and I hope as well that GE finally hit an inflection point…..GE’s share DID pop on the day of the announcement.  Hope does spring eternal!

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Comment

AVON has been having a winning streak recently with a few qualitative events driving the share price: insider trades and a potential suitor.  On Avon's investor day a few days ago, however, the firm revealed a few quantitative figures i.e. it plans to achieve single-digit revenue growth and double digit margins by 2021.  Now, that's some news after 5 of y-o-y quarterly revenue declines and EBIT margins hovering around 7%.  Clearly, this will give a boost of confidence to investors and I believe it is likely that this share price will react positively in the coming weeks.

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