Great article about investing in Germany

[Baoxiaodao]

http://www.economist.com/node/17572160?story_id=17572160

 

I came across the Economist magazine today and there are a few great articles, especially this one. This article explained in detail the operating philosophy of small to medium size companies' management in Germany. It answered the question why the economy of Germany is doing so well where almost everybody suffers. I think this is the only economy now in the world relies almost totally on renovation and technology to grow.

 

I am also a great beneficiary investing in Germany. The valuation is cheap because people think Germany is not very exciting. But the truth is when you looking at the listing companies one by one, as I am doing now, you will see a totally different picture. It is true Germany is not friendly to PE shops, but as a small investor, you will have the benefit of better corporate governance. And when there is upside, you do not have to worry about someone repricing the options and take your profit away.

 

I know many of you folks are afraid of buying equities in foreign markets, and it was not easy for me when I first started. However, by reading a lot of annual reports, there were a lot of gems to be picked up.

 

Fan

[CR]

The book that they mention, Hidden Champions, is also quite good and gives an excellent account via examples of how the best German companies work. One interesting takeaway is that many, if not most, of the market-dominating ones are family-owned and operated.

 

[Baoxiaodao]

The book that they mention, Hidden Champions, is also quite good and gives an excellent account via examples of how the best German companies work. One interesting takeaway is that many, if not most, of the market-dominating ones are family-owned and operated.

 

 

CR, thanks a lot! I almost missed the book. Any similar books you recommend? I have all ears to listen to you!

[augustabound]

Funny, I read an interview this morning with Paul Sonkin.  (It's years old, but I keep anything I can find on him and re-read it all).  He recommended reading, "Hidden Champions".

[CR]

Baoxiaodao, there's the follow up book "Hidden Champions of the 21st century."

 

There are a lot of semi-similar books such as Gorilla Game, Built to Last, Good to Great (prequel to Built to Last), and even Jim Roger's book on China "A Bull in China."

I have only read the first and last but hear good things about the two Collins books. If you pick up one of em, let me know what you think.

[augustabound]

To those who have read Hidden Champions of the 21st Century.  Has anyone else found that some of these companies are private that the writer mentions? (I understand also that the book is years old).

I'm not trying to take his advice or writings blindly, but when I look most of these companies up, they're private and can't find any info on them ever being public.

[Baoxiaodao]

Baoxiaodao, there's the follow up book "Hidden Champions of the 21st century."

 

There are a lot of semi-similar books such as Gorilla Game, Built to Last, Good to Great (prequel to Built to Last), and even Jim Roger's book on China "A Bull in China."

I have only read the first and last but hear good things about the two Collins books. If you pick up one of em, let me know what you think.

 

CR, thanks for the info! Will do if I found something interesting.

[augustabound]

To those who have read Hidden Champions of the 21st Century.  Has anyone else found that some of these companies are private that the writer mentions? (I understand also that the book is years old).

I'm not trying to take his advice or writings blindly, but when I look most of these companies up, they're private and can't find any info on them ever being public.

 

I'm about 50 pages in and have realized the book isn't intended for investors, but for more for execs.

Still seems worth the read though.

[CR]

Regarding them being private, that is often the point. They dont want to be heard of or known outside of their niche. Most of them were producing a commodity very very well and dont want more players in their space who think that they can pull off the same.

Also, they were mostly families who didnt want the business to leave their hands.

 

I was reading those books to understand how it could apply elsewhere. I dont imagine ever getting a solid opportunity to invest in one of the German [Hidden] Champions.

[ExpectedValue]

I think that some of the ideas in Hidden Champions, where you see what makes these businesses great, can be applied to investing.

 

It's a favorite book of Paul Sonkin of the Hummingbird Fund, who suggested the book to me a while back in an interview:

 

http://streetcapitalist.com/2009/08/10/my-interview-with-paul-sonkin/

 

If you study the kinds of companies Sonkin invests in, he manages to find these tiny businesses that are market leaders in niche products that still have large markets.

[augustabound]

I was reading those books to understand how it could apply elsewhere.

 

After realizing the target reader wasn't the individual investor, that's what I'm hoping to get out of it.  So far (about 100 pages in) so good.  Either way it's a good read.

 

 

It's a favorite book of Paul Sonkin of the Hummingbird Fund, who suggested the book to me a while back in an interview..

 

That's where I got the idea to read the book. ;)

Paul Sonkin is like Walter Schloss, I wish there was more information on him.  But then again, Schloss only has one creed, "we buy cheap stocks".  I think I even read in an interview that he was asked if he could expand on that.  He said "no, we buy cheap stocks."

[Baoxiaodao]

Just found out you can read the book for free on Google Books!