The company is not very big. Businessweek has the market cap at 9.5 billion but does not say if that is US dollars or Swiss francs. It trades at a little over half its revenue, 18 times earnings (extrapolating the first half result). It looks like it pays two dividends a year, the 2008 divs (they were lumpy) totaled CHF4.40 versus a price of about CHF64 giving it a yield of 6.8% based on the price when the second dividend paid in December. So far this year it has paid CHF2.30 in dividends.
The stock is a component in the iShares Switzerland ETF (EWL) but has a tiny weighting. Based on the chart it seems to correlate closely to the Swiss ETF although it has come back a little quicker than EWL and the SPX (that is as far as Yahoo finance goes back).
Today's post is a follow on from the last couple of days. If someone wants to own Switzerland they will have to choose between a fund of some sort or individual stocks. I would imagine that most funds will be heavy in Nestle, healthcare and financials as is the case with EWL. The big industrial stock from Switzerland that you have probably heard of is ABB (ABB) which has a 4.6% weight in the iShares fund.
One reason to seek out stocks for Switzerland is that because there are so many ADRs the country is pretty easy to access, more so than a lot of other places. A point I have made before is that most countries have a big bank, a phone company and oil company to invest in and chances are these types of companies will be heavy in country funds. Chances are that if all you do is buy country funds for foreign exposure then you will end up overweight sectors you don't really want to be overweight in.
iShares Switzerland is 21% financials. By using only country funds it becomes very easy to get above 20% in financials in the entire portfolio. Colombia could be an interesting investment destination and recently the GlobalX Colombia 20 ETF (GXG) listed making it very easy to buy the country. That is cool but the fund is 52% financials. I really doubt I ever want to exceed 20% in any sector. Really I probably don't want to exceed 15% very often.
So Kuehne+Nagel, by example, could be part of the solution. It is a way into a country that I might want 5-6% in at some point. I've had Novartis (NVS) for clients for ages targeted at a 3% weight in most instances. The bull case for Kuehne+Nagel probably goes something like: they help companies be more efficient so the demand for their services could go up and then going forward when the economy gets better it will catch a tail wind from the entire Swiss market and you get paid what looks like a pretty good dividend while you wait.
Hold the phone, I've spent about ten minutes on this thing and pulled that last sentence out my ... well use your imagination. I don't know the stock and I am not buying the stock but this is part of the process. I heard about something that on its surface is not clearly horrible, the numbers are not ghastly and it looks like the debt load is manageable. I tend to be in no hurry with these sorts of things. I'll put it on the watchlist (literally add it to a long list of names I follow) and see how it goes. As far as no hurry, I mentioned yesterday I sold New Zealand awhile back and while I know I will go back in I do not know when; well it is three years and counting since I sold NZT.
If you want to look at Kuehne+Nagel for yourself the ticker in Switzerland is KNIN, the US five letter designator is KHNGF and there might be an ADR with ticker KHNGY but it doesn't look like it has ever traded.
Take this as process not a recommendation. The industrial sector lends itself to so many themes that I doubt a Swiss logistics company will make its way in.
8 comments:
Thought sure that you'd blog on the interview with Dawn Bennett in today's on-line Barron's. She's dumping all her US equities for what looks like 70% emerging markets (Peru is #1) and 30% in gold and nat resources. Unlike your more granular approach, she advocates funds for diversification.
Wow.
i did not see that on the site yesterday (just the regular monday post by michael kahn).
i will probably write about it (assuming i find it;>)
ty
Very simplistically since it is a global financial crisis couldn't I buy foreign etf's and short a us financial etf a little bit to make up for the over weighting in financials?
May not be as sophisticated as your approach but something those of us who like etfs and a handful of holding might consider.
you could do that, of course. if that is right for you. not right for me.
23 trillion dollar problem!!!!!!
Roubini is really an optimist!
Seriously that 23 trillion headline seems misleading. Will they loose 80% on the holdings or 20% ?
If you lose 25% and you get paid back 6 years later with no interest did you loose 25% or 50% in reality? We will never know the size of this crisis but it is BIG.
And Roubini really is not Dr. Doom he is predicting 1% growth but says it will feel like a recession. I think he is right from an employment point of view and this will last years. If you do not believe me ask the Japanese.
If you can not sell more widgets slash costs!
In the mean time enjoy the rally.
I hadn't thought about Kuehne+Nagel in some years (I last lived in Europe in 2000), but it is a sound company that gets you exposure to much more than just Switzerland. Think of it as being equivalent to International Expeditors in German-speaking Europe. They are big in Germany, Austria, Switzerland, and much of eastern Europe. Like Roger, I'm not advocating investing in them today, but they are a company to be aware of when Europe starts to come back.
i immediately thought of Expiditors but was not sure if that was an apt comparison
you might want to make some background check of Kuehne + Nagel! It's not a little Swiss set up or a strong company in German speaking Europe. It's one of the largest logistics company in the world (#1 in seafreight / Top 3 in airfreight and contract logistics). Well positioned and financial very sound!
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