Page 29 - DIY Investor Magazine February 2018

Self-help
Van Lanschot - Dutch banking
Van Lanschot is the oldest independent bank in the Netherlands, dating back to 1737. It’s in the business of private banking, asset management and merchant banking, and in the process of running off a loan portfolio it serves to corporate clients.
Back in April 2016 it presented a new strategy designed to reinvigorate the private banking arm – at the time
the division earned around half of VL’s revenues yet accounted for only 7% of total profits, indicating poor efficiency and enormous scope for self-improvement. Looking forward, it is attempting to be more asset-
light and build up its capital ratios, returning cash to shareholders wherever possible. As it stands, its return on equity – a measure of profitability – is poor at around 7%; this we believe should be much higher.
Value
Alma Media
The Trust has taken a number of positions in Finland as we are finding undervalued businesses there which we think will perform well amid an improving economy.
Alma Media purports as a media owner of regional, local and free circulation newspapers for print and online, and the market is pricing it as such. But what
it should be focusing on is what the business is really about: online classifieds - websites that deal in used cars, used equipment and in real estate – of which it is a market leader. Axel Springer, a similar outfit in Norway, provides guidance in this respect, with the market placing significantly more value on its operations. In our opinion other investors will catch-up with this thinking.
Growth (at the right price) Zur Rose
thousand bricks and mortar pharmacies across Europe which have operated as such for 500 years.
What is more, the German market has recently been prised open by a European Court of Justice ruling and we believe market leader DocMorris will be a key beneficiary.
All-in-all it has been a good year for European equities, and in particular small-caps. But we think they have much further to go: profitability languishes as the earnings of European firms have yet to catch-up to those of their developed market counterparts. In the portfolio we will continue to seek out those businesses that have the potential for superior capital growth over the longer term.
Glossary: Deflation
a decrease in the price of goods and services across an economy.
Quantitative easing
when a central bank print money to buy assets and stimulate the economy.
Market capitalisation
the total value of a company’s issued shares.
Hawkish
policy stance by the central bank aimed at cooling the economy
Capital ratios
the amount of liquid assets a financial institution holds against its risk operations.
Return on equity
the amount of net income relative to the shareholders invested equity.
The above stock examples are intended for illustrative purposes only and are not indicative of the historical or future performance of the strategy or the chances of success of any particular strategy.
The information should not be construed as investment advice. Before entering into an investment agreement please consult a professional investment adviser.
Past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.
Founded in 1993, the group is in the businesses
of online drugs, operating a prescription mail order business under its DocMorris brand in Germany, and a market leading online pharmacy business in Switzerland under its Zur Rose brand.
Pharmacy is a market ripe for disruption in Europe: small, relatively high value non-perishable packages are extremely well-suited to e-commerce, which remains
a very under-penetrated market considering the 125
29 DIY Investor Magazine | Jan 2018