Thursday, September 28, 2017

What's there not to like about the Titanium IPO

A week ago I wrote about Rovio's IPO, which I think is overpriced, but I still pulled the trigger on that one. That IPO has just closed but the results aren't out yet. I'm hoping for an opening bounce and plan on exiting Rovio soon.


The next IPO on the schedule is Titanium, a rather small investment fund company, specializing in healthcare real estate. They describe themselves as follows:
Titanium on suomalainen, pankkiryhmistä riippumaton hoivakiinteistöihin ja asuntoihin sijoittaviin erikoissijoitusrahastoihin sekä omaisuudenhoitopalveluihin keskittynyt kasvuyhtiö. Titanium on perustettu vuonna 2009 ja sen hallinnoima varallisuus 30.6.2017 oli noin 350 miljoonaa euroa.

I've looked at the investment case and am struggling to find anything bad to say about it really. This post includes my notes. Again, not thoroughly formatted but the content is key right?

Titanium's business areas(numbers for end H1 2017)
  • Health care real estate fund: started 2013, AUM 217M, number of units 76, occupancy 100%, average lease 11 years == accounts for almost 90% of revenue
  • Apartment real estate fund, started 2016, AUM 58M, number of apartments 331, occupancy 93%
  • Stock market fund, started 2016, AUM 5M
  • Asset management service, AUM 62M

Biggest product = Healthcare real estate fund
  • real estate is new (mostly less than 10 years old)
  • in good, diversified locations
  • diversified rentees (23) with top3 rentees accounting for 36%

IPO details

Shares offered:
  • Share issuance = 827.5k shares
  • Share sale by current owners = 2440k shares
  • Additional share sale if oversubscription = 821.4k shares
  • Number of stocks offered to general public = 1.625 million (minimum is 150 stocks so 11k investors with minimum would do it)
  • Number of stocks offered to institutions = 1.48 million 
  • One share is 6.15 euro

  • Starts 25th of September,
  • Earliest end date 29th of September,
  • Results out 9th of October
  • Trading starts 16th of October

The numbers: Fast growth with awesome profitability

2011 through 2016: revenue growth 57% (CAGR) and at the same time EBITDA margin average 44%

Titanium's growth in 5 last years is +57% CAGR with an average EBITDA 44%.

Most important numbers:

H1 2017
H1 2016
2.9M / 63%
1.2 / 49%
3.5 / 52%
2.4M / 55%
Operating profit (EBIT)
2.3M / 49%
0.6M / 23%
2.2M / 33%

Profit for year
Equity ratio
Net gearing (negative value means more money than debt
0.20 euro
0.04 euro
0.18 euro
0.08 euro
Total assets

Inderes’ key numbers for 2017:
  • P/E 9.9
  • EV/S 4.2
  • EV/EBITDA 7.0
  • dividend yield 7.6%
  • EPS 0.62 euro

Future outlook, dividend and risks: demand is expected to remain high

  • Goal to increase revenue to 16M by 2020 (2017 about 10M) by increasing current products and by launching new products
    • ==> Assuming revenue for 2017 is around 7 million, that would require over 30% of annual growth for 4 years
    • Increase Healthcare fund to 500M within 2 to 3 years, with most of the expansion already agreed upon
  • Maintaining high profitability = EBITDA above 50%.
  • Dividend policy: growing dividend, at least 70% of profit

Major risks:
  • societal and political risks, e.g., social and health services reform (“Sote”)
  • AUM could go down, e.g., if people realize the extortionate fees they’re dishing out
  • regulatory, e.g., increased costs and risks of handling MIFID2, etc.
  • market turning and performance fees going down (lately a major component of revenue)

Additional insights and conclusion

  • A lot of emphasis is given to management team's experience, agility and "leanness".
  • All major owners are selling shares but still maintaining most, most seem to be selling 25-33% of their stocks. Long 2 year lock-up and key personnel have a 5 year working commitment.
  • Customer loyalty: Of customer who have used services and products, 94% are still customers.

Titanium seems to have come up with a very well scaling business model that is very cost efficient. I'm finding it difficult to come up with anything bad about the company, it basically seems to be a "license to print money". I'd like one of those please!

Wednesday, September 20, 2017

Rovio IPO valuation is too damn high!

Rovio is currently IPOing to the Helsinki stock exchange. Taking part in IPOs has been quite lucrative in the near past, so I’m definitely interested! I read Rovio’s IPO prospectus and will publish my notes here. The format ain’t too polished but here goes.

Stock and IPO basics

Number of stocks total currently = 75.3 million
Number of new stocks being issued = 2.7 million
Number of stocks after IPO = 78.0 million
Stock sellers get 373 million euro (=exit). Rovio gets 30 million euro only from stock issuance.

Number of stocks offered to general public = 2 million (minimum is 100 stocks so 20k investors with minimum would do it)
Number of stocks offered to institutions = 35.2 million (~95% of stocks are going to institutions)
..of which institutions’ already committed number of stocks = 20.2 million (15 million stocks up for grabs)

IPO ends Tuesday 25th of September at 16:00
Results of IPO out 28th of September
Trading commences on 29th of September at pre-list and 3rd of October on main list

Key numbers from end of H1 2017 (trailing 12 months):

Income statement:
Revenue 266 million (=S)
Operating income 29.5 million (=EBIT)
Net income 20.3 million (=E)

Cash flow statement:
Cash flow from operations 40.8 million (=CFFO)

Balance sheet:
Cash 44.9 million
Debt 50.0 million
Debt/CFFO = 1.2
Total assets 147 million (=B)
Net gearing -35% (=no net debt)

Profitability and valuation

EPS for H1 2017 (6 months) = 0.18 euro = low
EBIT margin 14%
ROE ttm 31%

low end of scale 10.25 euros per stock -> Market cap = 800 million (=P)
high end of scale 11.50 euros per stock -> Market cap = 897 million (=P)
P/B = 5.4 – 6.1
P/E = 39 – 44
P/S = 3.0 – 3.4
P/CFFO = 20 – 22

Other considerations

Future: Mobile gaming estimated to be growing at 14% through 2020.
No major operative risks being seen: Second movie is produced by Sony, not Rovio.
Number of personnel is reduced to less than half of peak (848 -> 376) (=lean).
Operations seem quite professional but still somewhat of a “one hit wonder”.
Leadership team (execs and board) all have skin in the game in the company via stocks and/or options.
Growth in previous months is very high but the sustainability of such growth seems unlikely.
Rovio leadership’s guidance for H2 2017 is “significant EBITDA increase […] Over 10% is considered ‘significant’”


One thing holding me back is my personal disinterest in engaging in Rovio’s games. In the reports one can see that the monthly average revenue per paying user (=MARPPU, one of Rovio’s KPIs) is over 30 euros is stunningly mind-boggling to me! Also, the Angry bird brand seems a bit past is Best before date, but that’s not the worst part.

The valuation is too damn high! ..But I may still try and juicy a couple of euros from “greater fools” by partaking in the IPO with a very short term outlook. Another strategy I’m pondering is abstaining for now, checking how the stocks opens in the first minutes of trading and try and do some “play moves” then.

Happy trading!

Sunday, June 4, 2017

Six Figures!

Andreas Levers: Hangar 6

Wow, it's been a long time since I last updated the blog. During the Spring I was a bit overwhelmed with my work load at the hamster wheel and also experienced a little bit of a writer's block. Being a procrastinator, starting writing or anything is always a small hurdle for me.

Since my last postback in January my portfolio has made a new record number. Six Figures! Let me say that again: SIX FIGURES! It now takes six beautiful numbers to write the number of euros in my portfolio. Here's the details:

06.01.17 10.05.17 change
Savings account 7575 7596 +21
Passive funds, broad 30172 33599 +3427
Passive funds, niches 9734 11330 +1596
Actively managed funds 6603 7499 +896
Listed stocks 24930 32872 +7942
Unlisted stocks 5250 5250 0
Fixed income 100 100 0
Cash 6012 4093 -1919
Total 90376 102337 +11961

I think some reflexion is suitable here. My savings and investment practice started 2011 when I started a ”real job” with a proper steady salary. I just simply kept my standard of living at the same level without adding more consumption.

Since then, about six and a half years have passed, and my portfolio has grown from essentially zero to six figures. During these years I've saved about a 1000 euros per month, altogether around 75 thousand euros. The remaining 25 grand has been generated my being in the market, mostly as capital gains and some as dividends also (about 20k and 5k, respectively). The stats on the previous years look something like this:

year savings cum. savings gains cum. gains portfolio value

2010 35 995

1 000
2011 9 936 10 931 -1 017 -1 017 9 919
2012 12 234 23 165 2 508 1 491 24 661
2013 2 424 25 589 2 067 3 558 29 152
2014 12 702 38 291 6 012 9 570 47 866
2015 12 167 50 458 3 786 13 356 63 819
2016 16 128 66 586 9 242 22 598 89 189
2017, until May 8 319 74 905 4 842 27 440 102 350

Year 2013 stands out as a year of less savings but that isn't the real picture as that year I bought my apartment and thus couldn't contribute to my portfolio but did pay approximate 10 thousand as the down payment.

Going forward I hope to be writing more often. BR, Jukka.

Saturday, January 7, 2017

Last stop before the big one

Little league 11 by Frank Pierson

90k! What? Already? Yes, just 2 months after making 80k, I've gained my next 10k to 90k. That was super quick – I hadn't expected to make 90k so soon.

A big part this 10k was generated by the market. Since the 80k in November, I've made contributions of around 4 400 euros and the market has returned around 6 800 euros. Thank you Mr Market!

...or should that be Mr Trump? The last 2 months' ”trump rally” has been great for the portfolio. It only took 57 days to go from 80k to 90k!

Here's my portfolio breakdown as of 6th of January 2017 (actually the first 90k was on the 3rd but I didn't record my portfolio breakdown then):

10.11.16 06.01.17 change
Savings account 5043 7575 +2532
Passive funds, broad 26698 30172 +3474
Passive funds, niches 8411 9734 +1323
Actively managed funds 6579 6603 +24
Listed stocks 24954 24930 -24
Unlisted stocks 5250 5250 0
Fixed income 100 100 0
Cash 4258 6012 +1754
Total 81293 90376 +9083

I don't think it is realistic or probably to think that I'd make the next 10k, 6 figures, so soon. Actually my guess is for the markets to remain rather flat for the next year, or possibly correct down. Schiller CAPE is currently over 28.

Tuesday, January 3, 2017

Year 2016 in review

What a year this has been once again, what a year! A lot has happened in world politics and my personal life. At the same time the markets have gained some more and been, in my opinion, overall less dramatic than I would have expected.


This chart shows my 2016 portfolio value changes. That bump on the last day is a contribution of 2 500 euros to my savings account I made on the last day of the year. This money is going to be put to work in a more efficient manner once I decide the place.

Portfolio valuation and savings. The blue line is the value of my portfolio and the red line is cost of the portfolio.

Let's look at the numbers for my portfolio cost and value in more detail in a table:

cost (= savings) 50 458 euro66 585 euro+16 127 euro
value63 820 euro89 189 euro+25 369 euro

Woot? So, during 2016 I managed to save an astonishing 16 127 euros (2015 was 12 167 euros). I am really happy with that number. That's about 1 344 euros (1014) per month.

During the year, my net income was about 37 600 euros so my savings rate was a very nice 43% (last year was only 33%). Where exactly the extra savings came from I'm not really sure, probably less upkeep on the apartment, but I didn't really skimp on anything, just lived life as before.


But I'm even more happy with the next number, the value of my portfolio is up 25 369 euros during the year. That means that the market produced about 9 242 euros or about +12% in gains for me. This is super sweet and the biggest gain in terms of euros I've ever made!

The below chart shows the TWR return calculation (in green, left scale) and the EUR/USD (in burgundy, right scale) currency rate. The TWR was down more than 10% in February but crossed over to the positive side during the summer and made most of it's gains in the last two months (thanks Mr Trump, I guess...). My portfolio is quite heavily weighted towards dollar nominated stuff so there's a definite correlation with the EUR/USD exchange rate as seen below.

TWR return calculation (in green, left scale) and the EUR/USD (in burgundy, right scale) currency rate.

Mortgage and net worth

During 2016 I also paid off 4815 euros of my mortgage. There's still plenty left. As the euribor rates are super low at the moment, I don't see any reason to contribute more than minimum to mortgage for the time being.

I can't tell yet if this will be considered an investment or not but if were an investment, my total contributions to my net worth would be 20 942 euros or about 56% (2015 was 46%) of my net income.

My net worth was up during the year about 27 500 euros to roughly 108 500 euros but I don't really track my net worth. I'm mostly interested in my money generating portfolio.


In last year's review, I went on to ponder whether we were headed off a cliff, and in February it certainly looked like that until it all turned around. I'm still inclined to think that the future is uncertain: stocks are the only game in town as interest are so low and market valuations are very high. The probability of good returns in future is diminishing as the current bull marches on. So what will I do? Keep adding to my portfolio with dollar cost averaging, just like until now. Godspeed for 2017!

Thursday, November 10, 2016

Here's to the Eighties!

Typewriter, Schreibmaschine by Frank Jakobi

A couple of days ago I made a new milestone by getting a new first digit for my portfolio. On Monday the 7th of November, I recorded, for the first time ever, a portfolio value over 80k euros or 80 035 euros to be exact.

This is only 164 days after making my previous milestone of 70k back in May. What? That's less than half a year which leaves me a bit surprised actually but this is a surprise I'm quite happy to handle.

I didn't record an exact portfolio breakdown on Monday so I'll do that here now. Donald Trump just won the presidency yesterday on Wednesday and there's an ongoing market rally which may inflate these numbers a bit.

29.05.2016 10.11.2016 change
Savings account 7101 5043 -2058
Passive funds, broad 22325 26698 +4373
Passive funds, niches 7089 8411 +1322
Actively managed funds 5310 6579 +1269
Listed stocks 19286 24954 +5668
Unlisted stocks 5250 5250 0
Fixed income 100 100 0
Cash 3700 4258 +558
Total 70161 81293 +11132

From the portfolio breakdown it's easy to see that since May, I have been buying quite many individual stocks. Should perhaps limit that because I do believe the market to be at least somewhat efficient and that passive funds are likelier winners over the long term.

Also, my net worth also just made 6 figures and is currently at around 101k. However, I don't really pay much attention to my net worth as my apartment is my only noteworthy asset outside of my portfolio and I couldn't really sell my apartment for as long as I wan't to live in it. Further, I consider my apartment perhaps more as a liability than an asset, so I'll just stick to focusing on my investment portfolio.

Anyways, next stop: the nineties! :)