Per Johansson Short Koenig and Bauer, Long LivaNova: Sohn London Conference

We're posting up notes from the Sohn London investment conference.  Next up is Per Johansson of Bodenholm Capital who presented a short of Koenig and Bauer (GER:SKBX) and a long of LivaNova (NAS:LIVN).


Per Johansson's Sohn London Conference Presentation

Short: Koenig and Bauer (GER: SKBX)

Koenig and Bauer is a German based printing press manufacturer. It has less conservative accounting. Cashflow and earnings expectations are set for a big reset.

Demand for the presses has structural challenges. Bank notes in circulation are not shrinking yet but may do in the future. Bank note printing makes up 20% of revenue, 40% of profits. They used to have a monopoly in the bank note printing area but now buyers are tendering contracts. Japanese competitors have started to win contracts recently. The other part of the business, sheetfed offset printing, is also facing headwinds. Volume is slowing and margins are contracting.

They have taken a lot of ones offs and restructuring charges making the accounts look better than they are. This may have been incentivised by management bonus targets.


Long: LivaNova (NAS: LIVN)

LivaNova is a medical device company. Bodenholm like spinoffs and they like companies that are de-conglomerizing. They have been invested in the company for 4 years and its one of their largest positions.The neuromodulation business is high quality. It’s almost a monopoly, there are high barriers to entry. They can grow revenue at 5-8% per year.

The other part of the business is better than analysts think and has market leading positions in most businesses. It can grow revenue at 5-6% and profit at 10% per annum.

They are also running clinical trials to see if the neuromodulation technology can be used to treat depression. If it can, it will be a game changer for the company because the market is huge.

LivaNova is a prime acquisition target.


Be sure to check out the rest of the presentations from Sohn London conference 2019.

Per Johansson Short ProSiebensat 1, Long Black Knight: Sohn London Conference

We're posting up notes from the Sohn London conference 2017.  Next up is Per Johansson of Bodenholm Capital who pitched a short of ProSiebensat 1 (ETR:PSM) and a long of Black Knight.


Per Johansson's Sohn London Presentation

Bodenholm has been live for two years. They spend 50% of their time and resources on short selling. When looking for shorts they start with the accounts and utilise the support of forensic accountants.

Short: ProSiebensat 1. (ETR:PSM)

ProSieben is a German TV company. There are 3 legs to the short thesis.

1.    It’s a structurally challenged business that is going to deteriorate. ProSieben has unfavourable channel demographics. A lot of its viewers are in the 40-49-year-old demographic that watch TV the least. They have the wrong content focus. They have been buying US content, but they can’t compete with Amazon and Netflix. They bought Maxdome but it has been a monetary and strategic failure. They took a bit of a write-down in the last quarter but there may be more to come. Advertising revenue has turned down.

2.    Their accounting is less than conservative. The company defines its leverage as 1.5x net debt to EBITDA but that does not include pensions and leasing. If you add that in you reach 2.5x. They have not budgeted for future content which would take the leverage to 5x.

3.    Several senior managers are leaving - the CEO, CFO have left.


Long: Black Knight

In the Nordics they look for quality compounders. In the global space they like conglomerates that are ‘deconglomerizing’ and spin-offs. Black Knight is a spin-off.

Why is Black Knight a good quality company?

-    It’s monopoly type company with 62% market share

-    their moat is growing due to regulation

-    Customer retention is over 90%

-    Switching costs are high

-    High margins and free cash flow

-    They have pricing power – they raise their prices every year.

-    It’s not a cyclical business

-    The balance sheet is strong. Currently the leverage is 2.8x but they will de-lever over the next 3 years to 0.7x net debt to EBITDA.


Be sure to check out the rest of the presentations from Sohn London 2017.

Per Johansson's Sohn London Presentation: Long eBay, Short ACS

We're posting up notes from the Sohn London Investment Conference 2015.  Next up is Per Johansson of Bodenholm Capital who pitched a long of EBAY and a short of ACS.


Per Johansson's Sohn London Conference Presentation 2015

Long Ebay (NAS: EBAY): Per Johansson is particularly interested in the investment opportunities created by spinoffs. The spinoff of Paypal from Ebay is creating an opportunity to invest in a smaller Ebay. The Paypal spinoff is the first step to unlocking Ebay’s value.

Ebay has a strong balance sheet. It is a high margin business but growth has temporarily slowed for three main reasons.  - May 2014, Google changed the search algorithm - A security breach led to customers having to change their passwords - The strength of the Dollar has been a headwind.

Johansson believes growth is picking up again. Auctions are only 15% of the business. Ebay owns some good brands that some market participants are not aware of. For example, it owns Mobile.de which he referred to as the” Autotrader of Germany.” In time the market will recognise the importance of Ebay’s brands.


Short ACS Actividades de Construccion y Servicios (BME: ACS): ACS is a Spain based global construction company. Johansson said that ACS has accounting irregularities and overstates its earnings. The company has not created any cash flow in the last five years. There are hidden liabilities on the balance sheet. ACS’s end markets are deteriorating. There are cost over-runs on big projects in California.


Be sure to check out the rest of the Sohn London Conference presentations.