Infrastructure and Energy Alternatives
AmTrust Financial Services
European Metals Holdings
Hilton Hotels & Resorts
Vienna Insurance Group
O2 Czech republic
Infrastructure and Energy Alternatives
Portfolio investment of Krupa Global Investments in American company Infrastructure and Energy Alternatives have been evaluated of more than 40 % and we still keep our current position.
IEA is one of the leading companies which specialize in the construction of wind and solar parks mainly in the USA. Due to recent acquisitions, the company was under pressure and its shares have fallen to historic lows. Today IEA announced that it has won two new contracts for the construction of wind parks in Texas with an output 272MW and 242 MW, which will provide electricity to more than 130, 000 households in Texas near Dallas. The value of contracts is USD 150 million. In recent weeks Krupa Global Investments has been building up its equity participation in IEA.
After these news the shares of IEA have risen by 40 %. We believe that the company has the potential and capacity to win more similar contracts for wind or solar parks in the USA, and we are planning to keep our current position.
KGI significantly evaluated one of its current investments in the pharmaceutical industry. We took the opportunity and our expectations of an increase in portfolio investment in the US pharmaceutical company Melinta Therapeutics were confirmed. KGI obtained a return on the investment more than 200 %.
Melinta Therapeutics is a biotech company that specializes in the production and developement of new antibiotics. The American institution FDA (Food & Drug Administration) has recently confirmed that it will be testing further use of the existing medicine Baxdela which is currently used mainly for skin diseases. The market appreciated this fact by a significant increase of company value.
Pharmaceutical industry and health care is a sector, where KGI has an excellent know-how and evaluation of investment in the company Melinta Therapeutics confirms that we are able to find and exploit attractive opportunities offered by the market in this area.
GAM Holding’s shares have fallen significantly since last year due to Tim Haywood, a portfolio manager who was involved in gross misconduct. The fund manager invested large sums in highly illiquid bonds. Therefore, investors have begun to withdraw money from GAM´s bond funds up to the total amount of 30 billion Swiss francs.
These events had a huge negative impact on the GAM´s value and KGI has justified doubts about the current situation in the company GAM and its further development. We demand that GAM shall clearly define its further strategy, eliminate disadvantageous investments, and prevent further capital outflows from the company. We also demand that Tim Haywood shall take responsibility for his actions.
Krupa Global Investments has built its 1% position in GAM between the first and the second quarter of 2019. The goal of KGI in this project is to act as the activist investor in order to make the company more valuable. We call on other GAM´s shareholders to promote our strategy and initiate a common approach.
The GAM Holding manages more than 130 billion CHF, equivalent to 3 trillion CZK. KGI is trying to get access to Swiss capital market and engage with Swiss investors via investments in the company GAM.
Krupa Global Investments announces position in DIA (Distribuidora Internacional de Alimentación) and it fully supports the “Make DIA Champion” initiative by L1 RETAIL, owned by Mikhail Friedman, one of the wealthiest businessman in Russia. We have confidence that L1 RETAIL ability to turn DIA around is proven by its successes in Russian X5 Retail Group and L1 RETAIL’s retail chain Holland & Barrett in the UK oriented on healthy products.
Wirecard is a German technological company that focuses on processing of electronic payments and issuing its own credit cards. The company operates primarily within the EU and Asia. Its competition is for example VISA or Mastercard. In recent years, Wirecard’s shares have experienced a rocket growth due to the company’s revenue growth in tens of percent per year.
In early 2019, The Financial Times reported on alleged accounting fraud and suspicious transactions of the company in Asia. Based on a series of articles published in The Financial Times, which were based on a law firm report, Singapore police started to investigate Wirecard and the company’s stock responded with a dramatic decline. Wirecard refused any charges. In the same period, a German market regulator BaFin temporarily stopped trading the volume of short positions of the company’s shares on the basis of a serious suspicion of a planned attack by the so-called short-sellers, influencing media news and market manipulation (Wirecard faced the so-called short-seller’s attack already in 2008 and 2016). Following these events, the German authorities stood up for Wirecard and initiated investigation of the accusation by the Financial Times.
Wirecard reported very good results for Q1 2019, with the company’s revenue increasing by 35% to € 566m, EBITDA rising 40% to € 160m, thus confirming the outlook for 2019.
We have invested in Wirecard shares over the past three months, i.e. from 3/2019, and we believe that the company will continue to implement this year’s plans. We expect that our investment will be appreciated by tens of percent.
KGI requests the management of Hrvatski Telekom to take steps leading to the transparency of the financial flows and to stop purposeful drawing of funds and depreciation of the company. In an open letter, we call on Deutsche Telekom, the majority owner of Hrvatski Telekom, to act in a transparent and orderly manner for the benefit of all shareholders of the company. In this case we see up to twice the growth potential of the Hrvatski Telekom’s value.
Deutsche Telekom uses the positive cash position of Hrvatski Telekom as a source of cheap financing for its projects with a non-transparent asset structure and to improve consolidated debt indicators KGI is ready to take steps to stop these disadvantageous financial operations of the management and to stop giving preference to Deutsche Telekom’s funding instead of paying out dividends of Hrvatski Telekom. It is a very similar model of non-standard financial operations as in the case of the Czech company Unipetrol.
Companies of the KGI group have a significant share and they belong among the top ten shareholders of Hrvatski Telekom.
Krupa Global Investments has doubled the value of its investment in the American company Diebold Nixdorf, which produces ATMs all around the world.
KGI has evaluated the investment potential of the financial and retail company Diebold Nixdorf and purchased a significant share in the amount of hundreds of millions of Czech crowns during the second half of the last year. KGI has so become one of the company’s largest institutional shareholders, holding its interest through shares and CFDs.
Based on the KGI activist Initiative, Diebold Nixdorf’s management was replaced and managing made more effective. After the implementation of effective steps and changes, to which KGI invited the management and the subsequent fulfilment of the expected positive development, the value of the company’s shares rose by more than 80%. The current value of Diebold Nixdorf is USD 8.5, and the value of KGI’s investment has almost doubled.
Krupa Global Investments bought a significant position in Facebook in the aftermath of the 2nd Quarter 2018 results where shares dropped sharply due to fears a slowdown in user growth and margin squeeze in the future, mainly linked to the cost of GDPR and Facebook’ steps to protect user data. In the last quarter, Facebook stock also suffered due Cambridge Analytica scandal where Facebook users’ data was used for political purposes. While this matter also had a negative effect quarterly results of the company, KGI assessed this decline as an opportunity for rapid upside potential. Facebook’s stock price has swiftly reversed trend after the recent fall in stock value, because the world’s largest social network still has great potential–primarily in better monetizing of its users in the Asia Pacific region. Currently, 2/3 of its revenue is generated by 1/3 of the users from the EU, US and Canada.
AmTrust Financial Services
Krupa Global Investments has successfully increased the value of its investment in the American insurance company AmTrust Financial by tens of percent. When selling its shares in the privatization of AmTrust, KGI received the amount of USD 70 million.
We have also invited the legend of world activist investing, Carl Icahn, to this investment. Mr. Icahn joined our activity and together we achieved a gradual increase in the value of AmTrust shares.
However, we don’t consider the purchase price during the privatization process to be fair and we have brought an action for damages before the US court. We request tens of millions of dollars from AmTrust. On 121 pages of the petition, we accurately describe the interconnection of individuals and their actions leading to a purposeful depreciation of the AmTrust value. We believe that we will be successful in the US court as well as with our complaint presented to the European Commission. It has already confirmed that it has been dealing with this case and that it will investigate it.
Krupa Global Investments exited investment in Borussia Dortmund in November 2018. We have seen shares rally more than 30 % because of great results in Bundesliga, where BVB took first place from the beginning of the season and secured position in Champions League. We still hold certain shares because we believe in prosperity and long term success of the Borussia Dortmund and eventually we believe we will cooperate with our youth from Ondrasovka Cup that our group organizes in Czech Republic. We strongly believe that BVB will outperform in following years mainly because of their great academy for young players and their recent purchase of Matt Hummels from Bayer Munich.
In the end of 2017 Krupa Global Investments closed out our position in Teva Pharmaceutical Industries with a significant profit. Our position amounting USD 10 million was held for about one month and a half.
At the beginning of November 2017, Teva’s shares fell to long-term lows due to fears that the company, deep in debt through the acquisition of Actavis, would not cope with margin pressures and expiration of patent for its key product, Copaxone. In mid-December the newly appointed CEO Schultz introduced a restructuring plan, which had a positive impact on the stock price prompting us to purchase shares. With that said, the plan involved aggressive cost cutting including the dismissal of 14,000 employees (1/4 of all employees) and redemption of a part of the heavy debt. We felt that this would be a complex process with a lot of risks that may have a negative impact on the price of shares. Therefore, we exited our position but we continue to keep an eye on Teva. We are prepared to take up our position again if shares fall significantly in price.
European Metals Holdings
Krupa Global Investments is one of the largest shareholders of European Metals Holdings (LON:EMH). EMH’s whose Czech subsidiary company Geomet, conducts lithium mining exploration at Cínovec and has future plans to carry out mining and processing there. Since we purchased shares, we have been actively involved in the project.
The project will significantly support research and development activities not only in the region but throughout the Czech Republic, while at the same time promoting education and increasing the employment of the skilled labour force.
We recently sent an open letter to the Board of Directors of European Metals Holdings due to their unsatisfactory leadership of the Cínovec Lithium Project. We are calling for a general meeting of the company.
As one of the largest shareholders of European Metals Holdings, we are concerned about the development of the Lithium mining project at Cínovec in recent months. As an activist investor, we are dissatisfied with the approach of EMH management and its representatives to the Czech state authorities and the lack of communication towards shareholders. We will continue to advocate on behalf of shareholders to make sure that the Cínovec Lithium Project is handled appropriately.
Hilton Hotels & Resorts
We purchased Hilton shares after the so-called reverse stock split, where the company intended to unlock potential of different business segments. Considering that all of Hilton’s businesses are healthy, this logical step has created several companies, thereby increasing the value of Hilton as a whole. Three new entities have emerged: Park Hotels & Resorts, Hilton Grand Vacations and Hilton Worldwide Holdings. We took the advantage of the fall in share price and made use of this investment opportunity. We exited our position at a significant profit.
Vienna Insurance Group
We invested in Vienna Insurance Group (VIE: VIG) because it a stable Austrian insurance group doing business in the dynamically growing CEE region. The company’s shares were under selling pressure at the turn of 2015/2016, because VIG did not meet net profit expectations as a result of one-off operations (IT and goodwill depreciation). Also, the environment of low interest rates had negative influence on the company. From our point of view, the significant fall of stocks price was an overreaction to the reduction in profits and dividends. The company had a very strong balance sheet, was undervalued and showed relatively dynamic growth in new markets within the CEE region. Thus, we believed (correctly) that it was only a matter of time when the profits of the company would start to grow again and the negative sentiment about the stock would improve. This was confirmed in the second half of 2017 and we subsequently exited the position with a significant profit.
KGI acquired a position in the refinery company Unipetrol at a time when the market did not yet properly appreciate its positive development. The stock price was squeezed to an extremely low level due to lack of a transparent strategy from the majority shareholder and also due to the accident at the Záluží site. Unipetrol, however, benefited from high refinery and petrochemical margins and also from the very good insurance policy that covered the repair of damaged technology and lost profits. Therefore, the company had record profits and additionally had a very strong balance sheet with no debt and with surplus cash. The re-commissioning of the damaged ethylene unit and the approval of the dividend contributed to the share price growth, which was additionally crowned by the voluntary takeover bid made by the majority shareholder.
O2 Czech republic
Krupa Global Investments took a bold strategy and purchased O2 shares at the time when uncertainty caused by the vague intentions of the majority shareholder concerning dividing of the company pushed the value of shares to a historic low. Successful division of the company together with the fact that shares returned to trading on the international MSCI index led to an increased share price. This allowed us to withdraw successfully from the investment with a profit.
Krupa Global Investments (KGI) sold most of its GAM shares after recent full year results announced in February 2020. KGI reduces its position in GAM Holding after management failed to show meaningful strategy for shareholders. Based on the report, GAM…
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