LVMUY: LVMH - Louis Vuitton Moet Hennessey

[John Hjorth]

TIF spiked up north of 130 after the LVMH Press Release about a bid at 120, now trading at ~124. I wonder what Mr. Arnault will do here.

[fareastwarriors]

LVMH reaches deal to acquire Tiffany for $16.3 billion

 

https://www.cnbc.com/2019/11/24/lvmh-reaches-deal-to-acquire-tiffany-for-16point3-billion.html

[John Hjorth]

Still no press releases on the primary sources [TIF & LVMH websites]. Paris opens in about 13½ hours from now, so it'll be released before then, if CNBC got it right here.

[CorpRaider]

David Faber made the report?  Sheeaat that's all you had to say.

[John Hjorth]

While perhaps some CoBF members may wait for news from LVMH, here is : Loro Piana : CASHMERE - The Origin of a Secret.^(*)

 

- - - o 0 o - - -

 

^(*) This must be a keeper for rkbabang.

[John Hjorth]

LVMH Press Release [November 25^th 2019] : LVMH Reaches Agreement with Tiffany & Co.

 

It seems like the code name for the acquisition project has been "Breakfast" - there is some talk about a Merger HoldCo named "Breakfast Holdings Acquisition Corp." and a merger sub called "Breakfast Acquisition Corp." in the Press Release. [ : - ) ]

[Okonomen]

LVMH now at around 20x earnings with significant exposure to Asia (30-40% of rev). Ithink this is an interesting and very moaty business with great management. Just have a hard time with the current uncertainty in China, but I guess that's why it trades under 20x 2021 earnings

[jefke]

Has anyone done any work on owning the stock through Dior (CDI.PA)? My interest was peaked as CDI always seemed to trade at a premium to MC.PA (= LVMH), but this switched to a discount at the peak of corona panic in March.

 

Having a hard time to find the exact corporate structure as Dior only seems to have annual reports in French, making it not easy to see the potential discount.

 

Where I'm at so far:

 

Dior is how the Arnault family hold most of their MC.PA shares. Dior holds 41% of MC shares and 56.8% of the voting rights.

 

At 180m Dior shares outstanding & 503m MC shares, there's about 1.145 share of MC (or LVMH) per share of Dior.

 

1) Any debt or net cash at CDI level?

Having a hard time figuring this out with no clear overview in the French annual report.

 

I looked at consolidated Dior numbers from their annual report and seem to have about 390m more cash for CDI, but also some extra borrowings which more or less cancel the cash out. There's 400m less of a deferred tax liability at CDI level. Other than that, i'm confused by slightly lower asset values on the CDI consolidated balance sheet. What causes this?

 

2) A holdco comes at a price. And based on some googling there seems to be 1-5% tax leakage when CDI receives the LVMH dividends.

 

3) That said, CDI seems to be willing to hand out extra cash and had an extra dividend in Dec 2019 for a total of €34 share compared to €4.8 for LVMH if I'm correct? In 2018 there was the same pay out for both companies.

 

=> based on my research, seems like there's no extra debt at CDI level, while having an underlying value of 1.14 LVMH share per CDI share.

 

Currently they both trade at €335. So by buying CDI, you currently buy LVMH at a discount. And if CDI keeps paying out that cash, you'll receive a higher dividend yield over time.

 

4) Historical prices in €

 

May 20 2019: MC: 336.5 & CDI : 431 (before CDI returned about €29 extra per cash that MC didn't)

Feb 2 2020: MC: 415 & CDI: 440

March 16 2020: MC: 311 & CDI : 265.6

May 4 2020 : MC: 335.45 & CDI : 335.2

 

RISKS

There's usually a way to get burned if you want to be too clever and get a discount on an underlying asset instead of just buying the underlying asset.

 

I guess there's a chance that at some point CDI does something that's less friendly vs the minority shareholder?

 

(Thoughts & feedback welcome. I'm just a rookie in the investment game. Might have made mistakes. Feedback highly appreciated!)

[jefke]

Saw this one pop up on Twitter again (

)

 

"What is the reason for Dior's lagging performance vs LVMH?"

 

"Because French squeeze-out rules."

 

So I have done some googling and seems like:

 

Arnault can launch a buy out offer at any price he chooses, with the intention of launching a squeeze-out afterwards.

Squeeze-out happens if an "independent expert" considers it a fair offer.

 

If the expert says it's fair, you're screwed? He already owns > 95%, so nothing minority shareholder can do?

 

 

Anyone have anything to add to this?

[John Hjorth]

jefke,

 

First a very belated welcome to you here on CoBF, and thank you very much for a first post of yours - to me, of high quality - here on CoBF! [ : - ) ]

 

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Respectfully and kindly, I take the freedom to suggest that you open & start a new topic about Christian Dior SE [CDI.PA] here in the Investment Idea forum for discussion of the MC.PA/CDI.PA pair. [This idea based on your observations is yours, and we don't have a separate topic for discussion of CDI.PA as far as I can see, so the privilege of starting the topic belongs in my view to you.]

 

I actually have some tangible to add to that particular discussion if you choose to do so [i hope you do, actually].

 

- - - o 0 o - - -

 

With regard to LVMH itself, I'm suffering from nagging doubts about if any or several of the brands have been subject to long term impairment caused by the pandemic, that again caused by permanent changes in consumer behavior among LVMH's various kinds of customers.

[DooDiligence]

jefke,

 

First a very belated welcome to you here on CoBF, and thank you very much for a first post of yours - to me, of high quality - here on CoBF! [ : - ) ]

 

- - - o 0 o - - -

 

Respectfully and kindly, I take the freedom to suggest that you open & start a new topic about Christian Dior SE [CDI.PA] here in the Investment Idea forum for discussion of the MC.PA/CDI.PA pair. [This idea based on your observations is yours, and we don't have a separate topic for discussion of CDI.PA as far as I can see, so the privilege of starting the topic belongs in my view to you.]

 

I actually have some tangible to add to that particular discussion if you choose to do so [i hope you do, actually].

 

- - - o 0 o - - -

 

With regard to LVMH itself, I'm suffering from nagging doubts about if any or several of the brands have been subject to long term impairment caused by the pandemic, that again caused by permanent changes in consumer behavior among LVMH's various kinds of customers.

 

My own personal opinion is that although covid may affect sales in the short term, the majority of LVMH brands are strong, especially when compared to newcomers which lack a strong history & cache.

 

As to Arnaults antics, no comment.

[jefke]

jefke,

 

First a very belated welcome to you here on CoBF, and thank you very much for a first post of yours - to me, of high quality - here on CoBF! [ : - ) ]

 

- - - o 0 o - - -

 

Respectfully and kindly, I take the freedom to suggest that you open & start a new topic about Christian Dior SE [CDI.PA] here in the Investment Idea forum for discussion of the MC.PA/CDI.PA pair. [This idea based on your observations is yours, and we don't have a separate topic for discussion of CDI.PA as far as I can see, so the privilege of starting the topic belongs in my view to you.]

 

I actually have some tangible to add to that particular discussion if you choose to do so [i hope you do, actually].

 

- - - o 0 o - - -

 

With regard to LVMH itself, I'm suffering from nagging doubts about if any or several of the brands have been subject to long term impairment caused by the pandemic, that again caused by permanent changes in consumer behavior among LVMH's various kinds of customers.

 

Thanks for the welcome. I just opened a thread for Dior: https://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/cdi-pa-christian-dior-se/

[John Hjorth]

Today, starting at 5:30 my local time, I've spent about 2½ [stiff] hours looking at the 2020 results and listening to the related conference call.

 

I'm still digesting what I've read & heard, but I'm right now actually still speachless!

 

LVMH group share of net profit EUR 4,702 B for 2020! [Personally, untill today, I would consider this kind of performance in the 2020 environment for this company totally out of reach.]

 

- Basically, during the whole 2020, I've been thumb sucking about adding to the position [Tell me about it].

[TorontoRaptorsFan]

They have impressive plans to turn Tiffany into the next Juggernaut.

 

 

 

[DooDiligence]

Birkenstock sold to LVMH-backed group in €4bn deal

 

www.ft.com/content/5d511022-46db-403e-9784-eb3807f918f9

[fareastwarriors]

Birkenstock sold to LVMH-backed group in €4bn deal

 

www.ft.com/content/5d511022-46db-403e-9784-eb3807f918f9

 

What is partnership like between  L Catterton and LVMH?

[DooDiligence]

Birkenstock sold to LVMH-backed group in €4bn deal

 

www.ft.com/content/5d511022-46db-403e-9784-eb3807f918f9

 

What is partnership like between  L Catterton and LVMH?

 

“Having been investors in Catterton’s funds since 1998, we have participated in its growth and success, evidenced by its strong track record and its distinctive culture,” Mr. Arnault, the chairman and chief executive of LVMH, said in the statement Tuesday. “L Catterton will provide investors with a unique value creation platform, bringing together our global network and industry expertise with Catterton’s longstanding operational approach to building value in consumer investments.”

 

www.nytimes.com/2016/01/06/business/dealbook/lvmhs-private-equity-arm-to-merge-with-catterton.html

 

---

 

https://wwd.com/business-news/financial/birkenstock-l-catterton-lvmh-bernard-arnault-sandals-1234725626/

 

---

 

https://www.lcatterton.com/Investments.html#!/current/M:nag_major

 

An anecdote, of very little value, my sister worked for John Hardy in the Caribbean for a long time, both before & after the Catterton buyout. She was unaware of the Arnault connection before now.

[Spekulatius]

Ok, this is a nonsense post in a sense, but recently I found the first post I ever wrote for the Motley Fool message boards and I recommend LVMH back then in 1998. I wish I had taken my own advice and just held the stock. I think I bought it  and then sold it a little later but don’t really remember.

I think I would have remembered if I had bought the stock and never sold it.

https://boards.fool.com/lvmh-cash-king-10195502.aspx?sort=postdate

 

Ok, back to drinking, it’s Friday night after all.

 

 

[DooDiligence]

17 hours ago, Spekulatius said:

Ok, this is a nonsense post in a sense, but recently I found the first post I ever wrote for the Motley Fool message boards and I recommend LVMH back then in 1998. I wish I had taken my own advice and just held the stock. I think I bought it  and then sold it a little later but don’t really remember.

I think I would have remembered if I had bought the stock and never sold it.

https://boards.fool.com/lvmh-cash-king-10195502.aspx?sort=postdate

 

Ok, back to drinking, it’s Friday night after all.

 

 

I've been thinking a lot about the gains I missed by selling too soon. We've all seen the Buffett quote about "ownership" vs "slips of paper" but we mostly just give this lip service.

With regards to investing, I've had the tendency to need something shiny and new, when there are "acres of diamonds" right beneath my feet (see Earl Nightingale - Acres of Diamonds). This is somewhat at odds with a non-materialistic, frugal lifestyle.

Quite a few months ago, I started thinking in terms of 5, 10 & 15+ year cash needs and I've put each business I own in a bucket based on the runway I believe exists for growth / reinvestment.

My favorites like (BRK, EW, NVO, ROP) are in the 15+ year bucket. The businesses which are more susceptible to cycles and have short term catalysts (APTS, DPZ, EQC, WFC) are in the 5 year bucket. Everything else goes into the 10 year jug. There will likely be some shuffling based on events that transpire with each business.

I'm finding a sense of satisfaction in actually owning a piece of each of these businesses. It also frees up time to learn other things (lately, DMX control of lighting).

---

I'll be meeting some friends tonight at Garys Brewery & Biergarten. I like the Rosetta Kriek by Brewery Ommegang!

[Gregmal]

9 hours ago, DooDiligence said:

I've been thinking a lot about the gains I missed by selling too soon. We've all seen the Buffett quote about "ownership" vs "slips of paper" but we mostly just give this lip service.

With regards to investing, I've had the tendency to need something shiny and new, when there are "acres of diamonds" right beneath my feet (see Earl Nightingale - Acres of Diamonds). This is somewhat at odds with a non-materialistic, frugal lifestyle.

Quite a few months ago, I started thinking in terms of 5, 10 & 15+ year cash needs and I've put each business I own in a bucket based on the runway I believe exists for growth / reinvestment.

My favorites like (BRK, EW, NVO, ROP) are in the 15+ year bucket. The businesses which are more susceptible to cycles and have short term catalysts (APTS, DPZ, EQC, WFC) are in the 5 year bucket. Everything else goes into the 10 year jug. There will likely be some shuffling based on events that transpire with each business.

I'm finding a sense of satisfaction in actually owning a piece of each of these businesses. It also frees up time to learn other things (lately, DMX control of lighting).

---

I'll be meeting some friends tonight at Garys Brewery & Biergarten. I like the Rosetta Kriek by Brewery Ommegang!

This is a mega interesting subject and I have been kicking it around in my head for ages. I still dont know the right answer. The thread about picking 3 stocks for the next 15 years further piqued my curiosity although it also caused me to go deep on my strategy. 

Bottom line is that I dont think, or know, or whatever, what anything will look like in 10-15 years. Businesses that are or have been good holds for that sort of duration have typically been dynamic in terms of their ability to evolve; essentially doing so, so that their shareholders dont have to. Or just being purely dominant. 

Berkshire is a good example, and granted Im at a 40% or so allocation. But I started the year around 8% and see it as event driven/rerating. Id sell a third or so around 275/280 simply on the rerating. I'd take it back to ~10% if it closed in on $300. So its a good, dynamic business but the valuation is important and the position size weighting is ultimately predicated upon my short term assessment. Should I just leave it? Grow out of it through earning more while keeping the position the same? Honestly, no fucking clue. 

So essentially, the question is, what is the proper allocation for a position that is "forever". And again, humbly, I have no idea. If its a forever position...why not be massively aggressive. Many people put 20%+ of their net worth into their primary residence and hold it for 30 years. Is there value to security? Sure. Is it static? Again, IDK. 

Personally, where I am leaning is that if you are investing in the public markets you need to be cognizant of today, tomorrow, and the future. The 3 businesses I chose for the "next 15 years" thread all fit the category of things Ive 1) owned for 5+ years. 2) would continue to own for 5+ years. and 3) companies I own that I literally dont give 2 shits about the short term movements in. I have maybe a half dozen of these. Its so nice and totally on a different level vs much of my other investments. Its nice not being neurotic about "if I get 10% lets sell".

But.....I also evaluate my short term and catalyst driven positions. Largely, they do as well, if not better than the "hold forever" stuff. Even the "hold forever" stuff, when I look at the trading positions for my investors who demand a strategy more hinged to short term, it beats the day lights out of "hold forever". 

So...I think that ultimately there is a trade off. The answer I still dont know. But largely, I think the personal question comes down to what are you trying to do and how active do you want to be? Do you want to be consumed by short term events? Or are you simply looking for a business that passively does for you what you'd hope your own does, without having to spend 40+ hours a week doing it, and 4-5 figures on the accounting every year?

Ultimately I think the answer revolves around what you are looking for out of the capital invested. If you are simply looking to put it somewhere and then take it back in a decade, the bar should but significantly higher. But the expected return is probably significantly lower. If you are willing to put in the work, the risk is high but so is the reward. For example, I saw AIV as a total crap box but also saw the spin off and subsequent valuation of the stub to be retarded, with a clear catalyst for rerating. I bought in back in mid December, with no intention to hold this thing for more than maybe 6-12 months. From sub $5, its provided an awesome short term return. Stuff like this is at the bread and butter of how I make my money and why I have been quite fortunate. So again, do you want a "full time job" IE monitoring the short duration investment, or...are you looking for something simple, easy, and hands off? In a way, its simple and makes sense. But it also seems to highlight the obviousness of just finding something that works and appreciating balance in ones own portfolio...which effectively takes us back to square one!

[John Hjorth]

Greg,

What you are posting about long term investing here in this topic is true, simply because opportunity costs are subject to compounding, too. Imagine being wrong on a company for decade, or more.

To ride the stock of a company for decade, or more, you have to like it, otherwise the position will impact the quality of your life in a negative way [loss of sleep, occupying your mind during your hours awake, perhaps also while doing other stuff than investing [on/off] [posted in general, very well aware of, that you're a money manager with a high energy level - for other persons than you, this could mean staying un-attached to your family outside working hours, like i.e. Mr. Buffett in his early years]].

Liking [the stock of] a company is dangerous, because it likely creates achoring and confirmation bias, which one personally has to be very aware of.

- - - o 0 o - - -

There is no easy solution to this non-zero sum game.

 

 

 

[Spekulatius]

On 4/2/2021 at 9:45 PM, Spekulatius said:

Ok, this is a nonsense post in a sense, but recently I found the first post I ever wrote for the Motley Fool message boards and I recommend LVMH back then in 1998. I wish I had taken my own advice and just held the stock. I think I bought it  and then sold it a little later but don’t really remember.

I think I would have remembered if I had bought the stock and never sold it.

https://boards.fool.com/lvmh-cash-king-10195502.aspx?sort=postdate

 

Ok, back to drinking, it’s Friday night after all.

I actually take it all back.  Just for fun, I looked at my old trading records (paper slips)  from 1998/99. I didn’t really had much money back then since I just moved to the US (moving to a different country is expensive ). However, I just started a Roth IRA and I quadrupled my money doing some wild trading back then in 18 month basically. So there is that.

I do think that I should have bought LVMH later though.

Another thing to note is that LVMH’s stock performance wasn’t that great before I posted in 1998. Arnault wasn’t acknowledged as a great manager either yet. The stock was fairly cheap compared to where it has been trading later though, because I understood that this was a pretty good business that will likely do well.

Also of note is that this was posted as a “Cash King” in MF recommendation which is the predecessor of the Rule maker, I think as Motley Fool evolved.

 

Again, this is totally unrelated to LVMH.

Edited April 4, 2021 by Spekulatius

[SharperDingaan]

The reality is that your favorite is going to be both a dog and a star over the extended holding period. Hence the strategy is really one of hold for the long-term, with trading around the opportunities. And holding an industry (or segment thereof), versus restricting yourself to just one name within it. 

Luxury is always in demand, and brand matters. At times, Tiffany might be better value than LVMH, Asian brands might be better than European. But if you're always invested in luxury goods ... the individual names really don't matter that much.

Large numbers of todays NA retired/retiring boomers will be entering homes within the decade. Auction houses, LTHC, pharma, funeral homes, and ash disposal should all be thriving businesses. Same as luxury goods ,,, as long as you are IN the names, the individual names really will not matter that much.

So what? It's all about asset allocation, and doing it before the mass market follows.

SD

 

 

 

Edited April 4, 2021 by SharperDingaan

[John Hjorth]

1 hour ago, Spekulatius said:

I actually take it all back.  Just for fun, I looked at my old trading records (paper slips)  from 1998/99. I didn’t really had much money back then since I just moved to the US (moving to a different country is expensive ). However, I just started a Roth IRA and I quadrupled my money doing some wild trading back then in 18 month basically. So there is that.

I do think that I should have bought LVMH later though.

Christ, this is a funny read! [ : - D]

Edited April 4, 2021 by John Hjorth

[DooDiligence]

I think my current mindset is due to the fact that I have a nice pile of FOMO money. It'll be interesting to see if I can sit on my hands when I'm fully invested again.

No system is foolproof & I'm hoping that mine proves I'm not a fool.