Last week was not so fortunate. Most investment groups did not manage to get positive returns and only a few were able to beat the S&P500. It was quite a tough week, with global indices dropping. Whereas the AEX hit 457 points 1.5 weeks ago, it closed below the 440 points last Friday. Yes, that is how quick it can go indeed. Last week the AEX dropped 1.59% (since the last ranking), the S&P500 dropped 1.12%, the FTSE went -1.09% and the Nikkei lost 5.07%

When looking at this week’s ranking, Next Generation captures the attention right away. Their bet on the earnings of Facebook skyrocketed after Facebook reported earnings that were better than expected. Their position in a turbo long made them 2000 euros within one day. This event makes them currently ‘the best investor of B&R Beurs’. Primus had a less fortunate week. The insecurity about the Brexit is what Primus wanted to profit from. Their turbo short with leverage 32 on GBP/USD went completely south. Even though they learned from the academy, Forex trading continues to be incredibly hard, since it is dependent on so many macro factors. In this particular example, the Brexit will complicate the matter even more, as there is no really clear view on what will happen to the UK and the British Sterling in case the Brexit takes place. In addition, Primus’ turbo short with leverage 6 on Netflix did also go in the opposite direction they hoped for.

Phoenix is currently to be found at the bottom of the ranking. They have a well-diversified portfolio, but their portfolio contains only losing positions. When will they cut their losses? Or will they wait for a reversal? Oakmont made a smart move. In times of insecurity, investors flee to safe havens where they will be sure of a (lower) return on their investment. Examples of these kind of safe havens are bonds and gold. Oakmont went long in the latter. The Market Vectors Junior Gold Miners ETF to be precise. Let’s hope that next week will be more positive! See you next week!

Written by Mees Heeringa

25. Ranking 01-05-2016

 

The AEX closed a bit under the 450 it had opened the week at. After an initial upward movement in the first days, resulting in its highest peak this year. One stock performed particularly well: ArcerlorMittal. From Wednesday onwards, the AEX followed a straight line down from Wednesday onwards.

Arcelormittal, the largest steel producer worldwide, traded at around 4 euros at the beginning of April showed some recovery in the weeks after, reaching a peak of 5.33 euros last Wednesday. The stock, which has previously traded for more than 65 euros, was troubled by globally declining commodity prices the past few years. About a month ago, there were some signs that the bottom had been reached and as such investors were eager to buy the share again, leading to a surging price.

This week there is one group that definitely stood out: Taurus followed Quants’ example and now share the title of biggest loser in B&R Beurs history with the two of them. Both have no money left on their account. In the case of Quants this loss was caused on some very volatile turbos.  Of course, we are very curious what happened to the others groups. Floryn, the winner of last year, made a nice profit and now is in 6th place. Merx was the biggest winner of this week with a return of 6.22%.

Written by Justin van Haaren and Robert Kaptein

24. Ranking 24-04-2016

Are you capable of running one of the biggest student investment societies in the world? Are you considering a full time board year at B&R Beurs? To give you some extra information about what it is like to be a member of the B&R Board, you can read an interview with one of our board members every week. This week Eckhart Vlaming will tell you more about his experiences as president of B&R Beurs.  

President – Eckhart Vlaming

What are your tasks?Vlaming

As president your most important tasks are leading and managing the society. Leading and managing are integral parts of a society but are very different. Leading means that you instigate new ideas, make long terms plans and exemplify the values of the society. You are the figurehead and need to behave as such. Managing means that you make sure everything runs smoothly, you need to keep a birds eye view of the society and make sure that everyone is able to do their job.

On a less abstract level, the president is directly in charge of the Investment Week and Symposium. As the most important event of the year for B&R Beurs, it is crucial that everyone is professionally organized and that everyone is motivated and does their job. You are also the main contact in our cooperation with other societies. As president you also chair all the board meetings and general assemblies of members, a decent speaking voice is always a plus.

What are your most valuable lessons of this year?

As a student you are nearly never in charge of anything. If you read the material and study the tests you will get there. This is a very sharp contrast with the job of president. You are constantly operating in a social setting, you lead the meetings, you need to motivate the people and negotiate the deals. Personally I gained a lot of social skills during the year.

Furthermore I would say that my time management skills and work ethic have drastically increased as well. I don’t really have one big task at which I can merely chip away. A president has a million small tasks that all take 5 to 30 minutes each. Being able to manage that workload will definitely be an asset later in life.

What did you like most about your year at B&R?

One of the most beautiful things that I saw is how willing people were to work for the society. It can be as small as washing dishs at the introduction weekend or as large as making a magazine. There is a ton of work that needs to be done as the year progresses and as B&R Beurs keeps growing the work only increases. But with growth also comes more people who are willing to work harder for the society. B&R Beurs really does bring people together.

What skills do you need as a president?

As president you need to be a little bit of everything. Most important though are social and communication skills. A key element is confidence, you need to make the tough decisions and push through plans and events. An entrepreneurial spirit is useful since there is plenty of room to grow in all directions, a bold and thorough approach yields the best result.

Most important is a positive attitude, without it you will motivate no one.

What was the most exciting part of this year?

The most exciting part of the year is still underway. When I sat in my chair at the symposium of 2015, listening to the introduction speech of Pim van der Wal, I could hardly believe that next year I would be standing there speaking to hundreds of people. As the day finally approaches it is becoming more and more surreal but in about three weeks I will put on my suit and introduce the Investment Symposium to everyone.

What were your highlights?

Every time a plan comes together a highlight is made. That we were able to start the national investment competition this year is the legacy of 2015/2016 board with the most potential. As personal achievement is that we were able to take big steps with level of the academies this year.

Board Interest Drinks

Would you like to know more about the experiences of the B&R board members? We will be available to answer any questions you may have regarding a board position. The second Board Interest drink will take place on Thursday 3rd of May at the Smitse from 17:00-19:00. Furthermore, you can always send one of us an individual notification.

Even though the growth of the market has been quite nice during last weeks, the Credit Suisse Fear Barometer hit an all-time high a week ago. Is there really a lot of fear amongst investors or is this just doomsday thinking? Should we worry about a new collapse of stock prices hitting us in the near future?

What is the CS Fear Barometer?

The Credit Suisse Fear Barometer (CSFB) is an index which measures fear in the market. It is calculated by taking the proceeds of selling a 3-month call option on the S&P500 with a strike 10% above the current market price (a 10% upside call). The proceeds are then used to buy a 3-month put option. The index indicates how low the strike of the put is when its price is the same as the 10% upside call (ceteris paribus, options become more expensive as the strike comes closer to the current quote). Simply put, this means that the CSFB measures the cost of a put option relative to the cost of a call option. The result is a measure of the relative costs of buying protection against a decline in stocks.

What happened with the index? 

As you can see in the graph below, the CSFB hit an all-time high last week. The fresh record of 44.7% could as well be just the beginning of a larger incline in the CSFB index.

CSFB

Should we worry? 

A rising fear barometer isn’t a very good sign if you’re long in the stock market but panicking over this is also overdone. As Mandy Xu, an equity derivatives strategist at Credit Suisse, put it: “It’s not so much that people are panicking and buying downside protection, but there’s this extreme pessimism or lack of confidence that the market can go higher from here in the next three months”.

And when looking at other fear measures around, the different fear measures seem to be conflicting. The VIX, on which we wrote an article a couple weeks ago, is decreasing steadily. How can this be?

The VIX measures investors’ expectation for stock swings over the next 30 days, while the CSFB measures a 3-month period. This indicates that investors are more worried about the next few months than about the next few weeks. This is probably due to sluggish global economy, fluctuating oil prices and first-quarter earnings and guidance. Part of the fear can also be explained by the possibility of a Brexit. This would compromise the stability of the Eurozone and would probably have a negative effect on the market.

Martijn de Kok

Are you capable of running one of the biggest student investment societies in the world? Are you considering a full time board year at B&R Beurs? To give you some extra information about what it is like to be a member of the B&R Board, you can read an interview with one of our board members every week. This week Robert Kaptein will tell you more about his experiences as secretary of B&R Beurs.  

What are your tasks?Kaptein

As a secretary you have several different tasks. In the first place you are the main contact person of our society. B&R has over 900 members nowadays and we are still growing, many of those members will approach you via all kinds of media, especially during the first months of the academic year. You are also responsible for most of the communication towards the members. Every week you will send all B&R members the newsletter containing everything that is currently going on at B&R Beurs. In order to let all the communication run smoothly, you will have a lot of contact with your fellow board and committee members.  

Furthermore, you are responsible for managing the back office of B&R Beurs, which includes doing the registration of members, investment groups and the brokers. Other typical responsibilities for the secretary include making agendas and notes when there are meetings. Finally, like every board member, you manage your own committee, you will be present at all the B&R Events and you will help your fellow board members with all kinds of tasks.

Why did you apply?

I have always enjoyed my time at B&R Beurs. From the moment I joined B&R, I became active and applied for several committees. Being active for B&R Beurs has brought me a lot: many friends, opportunities to invest and to develop my skills, but most importantly: a great time! A position in the board is a great new challenge and I wanted to take that responsibility. Besides that, I also had some ideas which I wanted to introduce. 

What are your most valuable lessons of this year?

Dealing with a lot of responsibility is a very valuable lesson. You need to get out of your comfort zone quite often during a board year. Furthermore, time management and working efficiently are two important aspects which I had to deal with this year. If you have some tasks which need to be done, don’t postpone them, otherwise you might get in trouble. Also working closely with a team can sometimes be challenging, but after this year I think I can call myself a better team player. In general, a board position makes you gain experience and knowledge which will be of great value in your career and in life.

What did you like most about your year at B&R?

B&R is unique, there is no society like ours. In the first place because we organize a platform for student investing on such a large scale. But B&R is also a really diverse group of persons where I met of a lot of people and made lots of friends. During a board year at B&R, you will meet tons of people with inspiring stories. Besides all the fellow students, you will also meet a lot of people from different companies.

What skills do you need as a secretary?

As a secretary you have to be an orderly and diligent person with good communication skills.  Every day a lot of small tasks need to be done and therefore it’s important to be a highly organized person. As a board member you also need an enthusiastic and dedicated attitude. If you have love for our society, B&R Beurs, then I am sure that it will work out.

What was the most exciting part of this year?

I think the start of the board year was the most exciting. One week after my board interview, I received a phone call from Pim van der Wal (president 2014-2015). He told me that I would be the next secretary of B&R Beurs. The feeling I experienced at that moment was indescribable. I was feeling really excited; something I wanted for a very long time now had become true. On the other hand, I instantly felt a lot of responsibility.

Later that month we had a dinner with the former board and the new board. Upfront I had no idea who the other new board members would be. I was sitting there at Divoza and my future colleagues were coming in one by one. I hardly knew them, but at that moment I realized; those are the people with which I will run the society this year. How will this turn out, I was asking myself. Now it’s one year later and I can say that it was a wonderful year. And the people I hardly knew became my friends.

What were your highlights?

B&R Beurs is the society that gives you the opportunity to come up with and to implement your own ideas.  One of the highlights of this year was that I had the opportunity to start the Editorial Committee and to introduce the B&R Magazine. I was lucky that so many good people applied for this committee and I am proud of the hard work that they have done. I hope that the B&R members like the results!

Another highlight is coming up: the Investment Symposium! The preparations are at full speed at the moment and I am sure it will be an unforgettable edition.

IMG_0394

Board Interest Drinks

Would you like to know more about the experiences of the B&R board members? The first Board Interest Drink will be held on Thursday the 21st of April at the Erasmus Paviljoen from 17:00 – 19:00. We will be available to answer any questions you may have regarding a board position. The second Board Interest drink will take place on Thursday 3rd of May at the Smitse from 17:00-19:00. Furthermore, you can always send one of us an individual notification.

Last week was not quite unfortunate. With global stock indices rising substantially, it was a great week for most investment groups. A very clear reason other than some steady numbers from China for this strong week cannot be found, but who cares?

Unity Investments was the biggest winner of this week and increased their lead, their long position in Arcelor Mittal again showed a nice profit. After making a nice profit on an AEX sprinter, Bulls-Eye capital is now in second place. Negotium Novum dropped in the ranking because they didn’t have positions last week. Oakmont on the other hand jumped 25 places after their Gold Miners ETF made an enormous profit gain. Rising Investments jumped 10 places in the ranking after making a profit on a well-diversified portfolio.

Are there any losers this week? Some groups surprisingly managed to get a negative return. CFQ for example; going long in Flow traders and shorting the AEX was not the right move for this week. There is even one group that managed to reach a turbo’s stop loss: Batavia Investments. Their loss on Flow must have been very painful, although they can be relieved about the fact that they are not even the biggest loser of the week. It gets worse… After a bunch of intraday trades in oil with lots of leverage, Taurus Investments lost again an enormous amount of their money. Will they be able to make a comeback or will they end like Quants?

GoPro and Danny Coster, a better love story than Twilight

Now back to the developments of last week. Did you follow what happened to GoPro? Well, at least the guys from Metrics Fund did. GoPro announced that one of Apple’s main designers, Danny Coster, switched jobs, meaning he is now an official GoPro employee. This announcement caught the attention of investors. On Wednesday, the stock price skyrocketed to +20% at the end of the day. Now if I tell you that the market capitalization of GoPro was about 1.6 billion US Dollars, you will probably be able to make an estimate about that man’s value. Too bad for Metrics Fund though, since they went short in GoPro because of strategic reasons. No one saw this coming. Luckily for them, they had some offsetting positions. The main indices were a little less volatile: AEX +3.78%, FTSE100 +2.25%, S&P500 +0.05%, NIKKEI225 +6.39%.

What is more important for you guys is next week, probably. There are some exciting events in the Financial World coming up. ASML, Heineken, AkzoNobel, Netflix, Morgan Stanley and others will report their earnings. Mario Draghi and his colleagues will make a decision concerning the interest rate. The USA will report some leading economic indicators, Germany will announce their producers prices, and much more will happen. Concluding: we are facing a particular interesting week!

Written by Mees Heeringa & Robert Kaptein

23. Ranking 17-04-2016

This week your academy committee gave a B&R Academy about Forex Trading; the trade in currencies with leverage. We will shortly summarize their major points.

Forex Trading is great fun and if you are looking to kill some time then Forex Trading might be thing for you. The use of leverage allows you to benefit from small changes in currencies. This leverage is necessary since currencies have the tendency to be less volatile than stocks. Furthermore, Forex Trading is more concerned with short-term trade and involves more technical analysis; it is less time consuming. You can include fundamentals, but then you should lower your leverage as you are looking on a long term period.

As some of you who were at the guest lecture of Bob Emanuels earlier this year noticed is that currency markets are a bit strange. You have huge institutionals who like their currency to trade around a specific range and you can benefit from this. A great example was the Swiss Franc and the Euro. More than a year ago there exchange rate was bounded below by 1.20 (1.2 Swiss Francs for 1 Euro). The Swiss national bank had to buy huge amounts of Francs to make sure the exchange rate remained the same and eventually removed the bottom level. In this case you can short the Swiss Franc and make a huge amount if the bound gets removed or lose little if it bounces (or vice versa). These kinds of ranges and buying behavior make sure the currency market is not always in equilibrium and you can benefit from this.

The special thing about currencies is that the market is open 7 days a week 24 hours a day. You want a new hobby and earn some money at the same time? There are several online Forex Trading sites you can subscribe to, such as plus500. Forex Trading is almost the same as technical analysis; the more you practice the better you become.

Written by Paul Hendriks

The UKs referendum on whether or not to leave the European Union is drawing ever closer. On June 23rd, England, Scotland, Wales, and Northern Ireland will go to the polls and in order to vote `Stay´ or `Leave´.

Brexit2

The British have always had a special relationship with the EU, accepting some rules but opting out of others. There aren’t many countries with as strong a eurosceptic movement as the UK. Unlike in many other countries, the euroscepticism isn’t confined to the outer fringes of the political spectrum either, with many members of the ruling center right and Tory Party supporting a Brexit as well.

Although the government around Cameron is firmly campaigning to stay, the general population is pretty divided. The latest Financial Times poll showing 43% for staying, and 42% for leaving, so it will be a close race.

The effects of leaving would undoubtedly be massive. Yes, if they leave, the UK would probably arrange some special relationship with the EU, like Norway perhaps. However it´s questionable whether they would be able to retain unrestricted free trade with the EU. Especially the financial industry is very nervous, and just this week the IMF issued a strong warning of the potential consequences.

But it also has to be said that many representatives from industry, politics, and academia disagree and argue that leaving the EU would end up being the most beneficial choice. With 2.2% the UK´s GDP growth last year was far above that of any other Eurozone member, maybe they´d be better off alone? Whatever happens, it will be fun to watch the political circus that´ll lead up to the referendum.

Written by Lorenzo Heinbuch

Last Thursday we witnessed a very special Advanced Academy. The academy was given by two very experienced fund managers, Rob Deneke from Comgest and Michiel Krauss from SKAGEN Funds. They discussed value investing, their funds’ investment strategies and the opportunities of the Chinese equity market.

The Chinese Equity Market

One of our favorite parts was definitely the explanation of the Chinese equity market and landscape. It’s a market with so much potential, yet still a mystery to so many of us. Rob talked about how the Chinese equity market is structured, and what makes it different than other global equity markets.

First off, the “Chinese equity market” is, in reality, several equity markets, not one. There are also several different types of Chinese shares. For example H shares are shares of companies based in mainland China, but that are traded on the Hong Kong stock exchange. This means that they are more readily available to foreign investors. A shares, on the other hand, refer to shares of Chinese companies that are only traded in mainland Chinese exchanges, such as Shanghai or Shenzhen.

Both speakers were pretty confident about the future potential of the Chinese economy and the Chinese equity market. Sure, we’ve been hearing a lot of bad news recently: slowing GDP growth, crazy stock market movements, dropping manufacturing, and more. However, they argued that this is mainly the result of the changing nature of the Chinese economy, as it transitions from a manufacturing to a service based system. They have trust in the Chinese government’s ability to implement much needed economic reforms, and only see the Chinese markets becoming even more important.

The Chinese A share market is the second biggest stock market by market cap out there. And up to today (right after the US), but only about 5% of A shares are held by foreigners. Even indices that you would expect to cover Chinese equities, such as the MSCI World Index or other emerging market funds, often aren’t holding any. But the A share market is, slowly, being opened up to foreigners. In addition, indices and global funds are, ever so slowly, entering it. Comgest and SKAGEN continue to see tremendous potential here.

Value Investing – tips and tricks

They also spent a lot of time talking about value investing, how their companies do it, and how you should do it. Value investing refers to investing in a certain stock because you believe that the company’s price doesn’t reflect its intrinsic value. This is the opposite of growth investing, when you invest because you believe the company is going places (everyone get on the Tesla train, choo choo!)

SKAGEN and Comgest both practice value investing. They stressed the perils of a value trap, when stocks look cheap, but really aren’t. Sure, the price of VW is really low right now, but that doesn’t mean that it’s cheap. But if you were looking for true investing advice, the one point they stressed again and again, was long-term investing. Ignore short-term price movements and don’t let them phase you. We’re young, we have time, and we can look at the long-term.

Written by Lorenzo Heinbuch

What a week! A week that was heavily influenced by people from white beaches far away, who thought they could hide their money over there. Nothing was less true. Something went wrong somewhere, now being known as one of the largest data-leaks in the history of mankind, Panama Papers caused substantial reputational damage. Lots of very well-known people had a “company” (read: post-box company) with the main goal of hiding for taxes. Markets seemed to react not very much: AEX -0.07%, S&P -1.17%, Hang Seng -2.45% and NIKKEI 225 -2.01%.

Last week was also the week of almost-closed M&A deals. While Floryn and Echelon had a really tough week, the same holds for some of our M&A Alumni in London. First of all, telecom companies Orange and Bouygues were coming quite close to a merger, but then talks collapsed and now they will go their own way. Unfortunately Borsa Valori had a turbo long on Bouygues, which is the main reason for their drop in the ranking this week.

It becomes interesting when we take a look at the collapsed inverse acquisition of Allergan by Pfizer, two gigantic pharmaceuticals. The former is known for producing Viagra, whereas the latter is known for its Botox. Pfizer scrapped its astonishing 160 billion dollar bid for Allergan after the US Treasury proposed new rules for inverse deals, which boiled down to the disappearance of tax advantages for Pfizer. For the same reason Halliburton’s 25 billion dollar bid for Baker Hughes was cancelled. In addition, the acquisition of Starwood Hotels by Anbang Insurance was blocked by intentions of the Chinese Government. In the end, the bankers have nothing to complain about, as announced M&A transactions hit a global high of 4.7 trillion US dollars last year.

Written by Mees Heeringa

22. Ranking 10-04-2016