Some small updates
So I sold Tessenderlo written up here. I have mentioned this on my Twitter as well. It was more than a 10% position, and I had even added at €35 per share. I have sold it in the €33 euro range. I have three reasons for this. The first one is that Bio-valorization income disappointed and went down. When I expected it to go up.
The second one is that especially their fertilizer segment is probably quite reliant on low natural gas prices (<$3/mcf). This is a major part of their income. And currently there is talk of potentially $10+ natural gas if the winter is colder than average. And having studied the oil and gas market I have come to the conclusion that higher fossil fuel prices may be ahead of us in the next 5 or so years See this article and my Tourmaline and Pioneer write up for more details. So I still think Tessenderlo is on the cheap side over the next 5 years, but I want to see how this shakes out. CF industries has already shut down some of their operations due to high prices.
The third reason is that I always have a list of cheap stocks waiting in line to get into my portfolio. And at 8-9x earnings and above average ROIC I thought there were better alternatives with better near term prospects that actually pay a dividend and have better catalysts to close the fair value gap. When I sell a stock, the alternative is never to hold cash.
Some of the stocks not mentioned on this news letter that I have added to are the German listing of Haier. It was first written up by @Fritz844 here. And my thoughts on it here and here.
Since energy stocks are so cheap, some of it has been put into Falcon minerals, a high quality royalty trust owning low cost, mostly oil acreage. Yielding about 15% at current oil and gas prices written up here on VIC. Note that depreciation is not a real expense with this royalty trust (because they get a % of revenue).
Additionally I have bought a stake in British American Tobacco written up here on VIC. It is trading at 7-8x FCF, with a 8% dividend yield, and new nicotine delivery product revenue is growing at 50% (although from a small base). I think 2022 might be a good year for them, and it is a nice protection against a market crash, since tobacco generally has very steady revenues. And you get paid while you wait.
That is all for today.