Deutsche Bank: Capital Raise - Best Practise?

Today Deutsche Bank surprisingly announced a capital raise of 2.8 billion EUR together with better than expected Q1 results.
The media as well as investors (+ 6% today) reacted very positive towards those plans and the earnings.

I believe that it was very well done by Fitschen/Jain:
What did Deutsche Bank do: Outstanding shares are 929 mn, new shares of 90 mn will be issued to institutional investors. They stay closely under 10% increase in share count. This enables them to not offer subscription rights to all existing shareholders.

• Existing shareholders suffer a dilution of 10% without rights issue.

They executed the sell of the new stocks on this Tuesday. Stock is now at almost 35 EUR/share after positive results.  However the selling price of the new stocks was 32.90 EUR, that is a discount of 2,1 EUR or 6%.

• New shares were sold at a discount exclusively to institutional investors.

To conclude: The share issuance was well and swift done to the disadvantage of small/"retail" shareholders, yet they do not seem to realize.

Only a  low than 10% capital increase could have been announced and executed in such a fast manner - it took only 1 day.
Why this haste - maybe because the Q1 results are not so good after all. Provisions, anyone?

Update: According to this article Deutsche Bank received 2.96 bn new capital from 90 mn shares.
So that makes 32.88 EUR/share, not the 31.11 EUR they originally planned with.

Analyst Recommendation and Stock Performance: Performance Feb+Mar (Pt. 07)

After a long holiday, i finally come up with the seventh part of my little "field study" about the meaningfulness of (sell-side!) analysts recommendations.

The situation of the two portfolios changed quite a bit.
In February and March the Best-Portfolio together with DJ-Index clearly outrun the Worst-Basket. In general there seems to be a strong correlation between the DJ-Index and the Best-Basket. Indeed  US-American stocks are prevailing in the best basket, the worst-basket seems is more European influenced.

Despite the improved performance of the Best-basket during the latest two month, the Worst-Basket is still stronger.
The Worst-Basket really took a big hit in February.
It seems important to notice, that the standard deviation of the Worst-Basket is much higher, for me a evidence of the importance of diversification among the worst-rated securities.

Hess AG: From IPO to insolvency in less than half a year

Hess AG is a German based enterprise with 360 employees producing lights and lanterns.
They IPOed on the 25th of October and quite high priced, starting at 15 EUR/share.

The graphic shows the development.

On January the 21 Hess AG announced the sacking of key personal ( among them the CFO) and suspected manipulations.

On valueandopportunity the consolidation of cash flows doesn t work out, it seems that revenues have been booked against receivables.
By what it seems, the fraud might had been discovered quite easy.
Interesting for me was that numerical information that is underlying the prospectus is based on is not double checked.
Yesterday on the 13th of February the filed for insolvency for the mother company as well as one subsidiary.
The company states that its is deeply indebted and lacking perspectives for the future.

This is an incredible story i would have expected in China (no offense) or other less developed financial markets; yet this thinking now seems like arrogance to me.
No thinking about it, everybody profited well from this scheme, until it blew. The banks receiving underwriting fees, the key employees bonuses. The auditors (here DHMP according to this news) might have to justify themselves, but against such foul-play they are helpless (of course...). Regulatory bodies are knee deep in work anyway.

Now the company is insolvent and possible claims from law suits can most likely not be covered.

Thoughts on luxury tax

Recently a rich German (Maschmeyer) promoted the idea of a tax on luxury goods, which ran through the media.
Distribution through such a tax would "hit the right ones".

I disagree with this view.
While showing off with luxury to promote personal wealth and status receives widespread negative sentiment, it also has its advantages.
Especially in Germany many of those goods are manufactured, some of the companies are even listed, such as HanseYachts AG.
By "wasting" money on such goods, employment is created. Money is circling in the economy, similar to a distribution by above tax, yet without repression.
The actual problem is people not spending their money on goods/services, but holding it in highly liquid investments. Due to their high elasticity taxation becomes difficult.

Thereby in my view people should under no circumstances be discouraged to spend their excessive wealth as long as it stimulates the real economy.

While it is true that such luxury goods (esp. real estates) would be more difficult to move abroad, thereby being easier to tax, the registration and collection of such a tax would be a horrific work. If the outcome would be really a fiscal surplus given the additional work and bureaucracy is doubtful.
Just the definition of what is luxury is Sisyphus work and would be accompanied by thousands of law suits i can imaging.

Analyst Recommendation and Stock Performance: Performance Jan (Pt. 06)

The January episode, again very interesting. Yet the result is strikingly often similar:

We begin with the mtm graphic:

The worst basket outperformed all other indexes again with +8,5%, mainly driven by centrotherm (+64%), the most volatile stock in the indexes.

The total performance:

The worst basket caught up again with the DAX30 (only 0,7%). The DJ also had a strong month, second best performance (+4,5%). The best basket increase by 3,6%.

I would like to point out that this little research does have a big flaw:

The dividends payed out are not registered in the performance! Unlike in the two performance indexes DAX and DJIA. 

Of course I could adjust for dividend payed out per stock, however i do not have so much time to watch over all the stocks regarding a payout.

This effect might be stronger on the best basket, since stocks in worst basket might have major problems regarding liquidity and do not have the reserves for dividend payout.

Analyst Recommendation and Stock Performance: Performance Dec (Pt. 05)

These are the update results from my little field research:

While the "worst" basket increased by 3% in December, the "best" basket decreased by -2,7%.
The  "worst" basket was driven by Akzo Nobel, Dendreon Corp and First Solar (now up almost 100% since begin of records).
The "best" basket showed almost no positive returns this month, many stocks loose -4% and more.

The overall performance shows quite a clear image so far:

DAX clearly strongest index (+15,2%), all indexes with positive upward movement except best basket with a very weak general performance (0,7%).

Herbalife short presentation

This is the link to Ackman's research on possible multi-channel pyramid fraud at Herbalife. 300+ pages.

Will be extremly interesting to see how this develops, i think he has a very strong page. Really good research, must have taken months over months.
Interesting enought that this company got away so long with this, should the accusations be true.