Moleskine SpA Takeover

Last march I published a research article on the notebook maker Moleskine, Moleskine SpA: Paper Is Not Dead.

Well Moleskine’s private equity owners decided to sell their shares for €2.40 to a Belgian autogroup, D’Ieteren NV. It’s not much and only 10 cent over the IPO of €2.30 in 2013. However it’s a 73.9% gain in 7 months if you bought it in March (€1.38 per share at the time of the publication). Seeking Alpha asked me to comment on the offer. Here’s what I said:

I don’t know a lot about the Belgian auto group. This is the private equity owner that’s selling their stake in the company and the rest will be sold after at the same price. The buyer, D’Ieteren NV is a Belgian car importer and that’s all I know. I don’t see the connection between the notebook maker and the auto group but it looks like that D’Ieteren NV might be turning into a holding company. The market didn’t seem to appreciate the move by looking at drop in D’Ieteren NV share price.

I think Moleskine could warrant a higher price but I don’t think they will get it for multiple reasons. Moleskine is a great company to own for the long-term and will definitely create shareholder value for the many years to come. But because the biggest owner agreed to sale (private equity need to exit their position) and Moleskine lacks the visibility of a big market (should be listed in NY or Milan), it won’t get much more unless somebody else steps up. The offer is only 10 cent over the IPO price of 2.30. I find that disappointing. The big winner in all of this is the private equity owner and shareholders who bought it when it was trading in the dollar range. It’s a great brand with great products and great legs to go on.

Now if you really love the company and still want to be an owner, you might have to buy shares in D’Ieteren NV. I don’t much about them except that 1) they have been around since 1805 2) it’s family owned and 3) they still to have a long-term vision. Without it they wouldn’t have been around today.

NAPEC: The Sale Is Still On

My latest update on NAPEC (NPC). It’s been a year and a half since my last article on NAPEC. I got over the latest developments and a re-assessment of the valuation. NAPEC has now turned the corner on their troubled past and operations have been improving. and I still believe that NAPEC is undervalued.

Below is a small sample of the article since Seeking Alpha has the rights to it. It’s free for the next thirty days.

Repost from Seeking Alpha
By Brian Langis


  • NAPEC is a former turnaround situation that is still trading at a bargain.
  • Backlog and revenues are at an all-time high.
  • It’s time to re-assess NAPEC. The company’s intrinsic merit is unrecognized by the financial community.
  • This is a mispriced security with a large gap between current price and value. There are many catalysts that could “wake up” the stock.
  • The market overreacted to the Q2-2016 guidance miss.

Author’s Notes:

CVTech Group officially became NAPEC Inc. (OTC:CVTPF, TSX: NPC) in September 2014. Throughout the article, NAPEC Inc. can also be referred to as NPC, CVTech Group, or the Corporation and its subsidiaries such as Riggs Distler and Thirau Inc.

NAPEC Inc. is primarily traded on the Toronto Stock Exchange under the sticker NPC. In the last ninety days, NPC has an average volume of 139,322 shares with an average daily value of $152,623.

Note: Dollar amounts are in Canadian $ unless mentioned otherwise. USD-CAD 1.32 Price of 1 USD in CAD as of September 20, 2016.


This is my third analysis of NAPEC. The first two were over a year and half ago. At the time, NAPEC was going through some major changes. This is an update on the progress and valuation of the company. To understand where NAPEC is today, it’s important to understand how it got here.

My first article, “NAPEC Inc: 30%-40% Upside In Potential Turnaround,” published on March 11, 2015, offers an in-depth analysis of NAPEC. It’s a long detailed article that explained the turmoil and the changes that followed. If you have a PRO membership, I suggest you start with this one. “The NAPEC Turnaround – Mispriced Security Offers A Lot Of Upside” provides an update on my original thesis. This article is free for access.

Below is a chart of NAPEC since my original publication:

Source: Google Finance. NPC -3.85% versus S&P TSX -2.64% from March 13, 2015 (original publication date) to September 20, 2016.

Since my initial article, NAPEC went through a major slump for no apparent reason. As often is the case, especially in the microcap orbit, nothing material occurred with NPC that caused the stock to drop to $0.68 in November 2015; Mr. Market just decided he liked NAPEC 34% less than he did in Q1-2015. Then again, on no particular news, NAPEC stock price managed to rebound from its trough to hit $1.27 a month ago. The trough to its peak represents an 89% gain! On August 11, 2016, NPC released its Q2-2016 results, and the stock dropped 16.6% in one day. NPC stock price has been floating around $1 since. Here’s the part that’s sometime hard to grasp: the $1.27 NPC, the $0.68 NPC, and the $1 NPC is the same company. There was nothing fundamentally different in NAPEC that would suggest an 85%+ price range movement. The intrinsic value of NAPEC didn’t change that much; if anything, it went up. This brings me back to The Intelligent Investor by Benjamin Graham. In this famous book, Graham states that a stock is not just a ticker symbol – it’s an ownership interest in an actual business, with an underlying value that does not depend on its share price. The market is a pendulum that forever swings between unsustainable optimism (which makes the stocks too expensive) and unjustified pessimism (which makes them too cheap). For more information on Graham and market fluctuation, I invite you to read Chapter 8 from The Intelligent Investor.

Before I state the investment case, here’s a brief overview of NAPEC.

NAPEC stands for North American Power and Energy Corporation. The new name was adopted by the company in September 2014, after being known as CVTech Group for many years. NAPEC operates in the energy sector. It provides construction and maintenance services for the electricity and heavy industrial markets. The company operates in Québec, Ontario and the northeast United States. NPC builds and maintains electrical transmission and distribution grids, as well as networks for gas utilities. In addition, it installs gas-powered and electric-powered heavy equipment for utilities, gas-fired industrial power plants, and petrochemical facilities in North America.

For the full article click here.

Henry Singleton Forbes 1979 Article

“[Warren Buffett] considers that Henry Singleton of Teledyne has the best operating and capital deployment record in American business.” – John Train’s The Money Masters

“He understood how to move between real assets and financial assets in a way you don’t see today…He was the most brilliant industrialist that I’ve ever met, and I’ve met many”Leon G. Cooperman speaking about Henry Singleton

Dr. Henry E. Singleton (1916-1999) was a business genius. He’s the founder of Teledyne, at the time one of the US’s largest conglomerates. Created in 1960, Teledyne was formed to capitalize on the coming revolution in which digital technology would replace analog devices and systems in everything we could touch and imagine. Loosely translated, Teledyne means Power Through Communication.

Henry Singleton was the idea behind the outstanding book The Outsiders by William N. Thorndike. Singleton is a master capital allocator and absolutely crushed the market. He could read a book a day and play chess blindfolded. He kept a low key profile and rarely gave interviews. This explains in part why most people aren’t familiar with him. Little is known today of Singleton’s achievements as a capital deployer and there’s a lot to learn.

Here’s the 6 pages Forbes article.

Henry Singleton Forbes 1979 article

Something to listen to in the car:


Value Investing Test

I got this from Francis Chou’s latest fund letter for the first half ended June 30, 2016.

Some twenty years ago, the following test was developed to ascertain whether or not an individual could make it as a value investor. As you are well aware, investing is not done in silos. You have to take all pertinent information and check how it is interrelated.

There are 4 test questions. Answer them in sequence. Don’t miss one. Please do not cheat.

Giraffe Test

1. How do you put a giraffe into a refrigerator?

Correct answer:

answer 1

Elephant Test

2. How do you put an elephant into a refrigerator?

Did you say, open the refrigerator, put in the elephant, and close the refrigerator? Wrong Answer.

Correct Answer:

answer 2

Lion King Test

3. The Lion King is hosting an Animal Conference. All the animals attend … except one. Which animal does not attend?

Correct Answer:

answer 3

Okay, even if you did not answer the first three questions correctly, you still have one more chance to show whether you have any innate qualities to be a value investor. If you get it wrong, you could be deluding yourself and may have to seek counseling.

Crocodile Test

4. There is a river you must cross but it is used by crocodiles, and you do not have a boat. How do you manage it?

Correct Answer:

answer 4

When this test was administered to fourth graders, most of them were able to answer some of the questions but 90% of adults could not answer even a single question. This shows what Modern Portfolio Theory can do to investors.

Chart of the Greatest Investors

I don’t know whom to give the credits to for this chart and it’s getting passed around all over the Internet. The chart includes current legend and investors who are no longer among us.

Chart of the greatest investors of all time

There’s a name at the bottom right that I’ve never seen before, Philip Carret. I had to look him up and it turned out he was the founder of one of the country’s first mutual funds and a legendary investor who swapped investment ideas with Warren E. Buffett’s father half a century ago. He died at the age of 101. He was known as a longtime proponent of the ”value” style of investing: buying shares of companies with steadily growing earnings, strong balance sheets and committed managers who themselves owned a hefty stake in the company, and then holding onto those investments for many years. According to his obituary he scoffed at the tendency of many younger mutual fund managers to hold a stock for weeks, if not days, which he called ”the pinnacle of stupidity.”

Shakespeare’s “As You Like It” Knockoff

An informative knockoff of the seven ages of man from Shakespeare’s “As You Like It” by Colin Mayer, a professor at and former dean of the Said Business School at the University of Oxford:

At first the merchant trading company established by royal charter to undertake voyages of discovery and promote commerce around the world. 

Then the public corporation created by Acts of Parliament to engage in major public works and the building of canals and railways. 

Then with the freedom of incorporation in the 19th century, the private corporation — the seedbed of the industrial revolution and the manufacturing corporation.

Next comes the service firm and the rise of the financial institution.

The fifth age is the transnational corporation putting a girdle around the world and running rings around national governments.

Last scene of all that ends this strange eventful history is the mindful corporation — sans machines, sans man, sans money, sans everything.

The last line is in reference to the rise the intangible corporation.  How many corporations are there today that have no assets, no profits, and are worth billions? Companies like Whatapps comes to mind. According to a study by merchant bank Ocean Tomo on the makeup of public company balance sheets in the S&P 500 between 1975 and 2015, the figures showed that at the end of 2015, 84% of assets held by S&P 500 companies were intangible by nature, up from only 17% in 1975. Ocean Tomo calculates intangible assets simply “by subtracting the tangible book value from the market capitalization of a given company or index,” so the rise in intangibles since the 1970s is in part just a reflection of rising stock market valuations.

Why the Corporation is Failing: Colin Mayer

What I’ve Learn From Being a Dad. Lessons and Insights.

This newsletter is a little different than my previous ones. Since the end of summer is near and school is starting, I decided to go with something more lighthearted.

I’ve been a dad for a little over two years now and I wanted to share some insights and observations that could be useful to current and future dads. When you announce you are expecting, you get endless advice from friends who already have a kid. So here’s more. Please note that there’s a lot left to learn.



  • During my wife’s pregnancy I didn’t read any “how to become a daddy/baby” book. I’ve told my numerous people that parenting books are a joke. “My baby is not conforming to the behavior model in the book, what’s wrong with my baby?”. Well maybe the behavior model in the book is not conforming to your baby. The whole point is that you need to figure it out yourself. It’s a life journey, an experience that can’t be described or learned in a book. That’s why there’s no special parent training center. My wife told me anything I needed to know. She knows everything. I’m very lucky to have married my wife.
  • You can’t complain around a pregnant woman. Never say you are tired.
  • Everyone’s mom got pregnant.
  • We did go to a prenatal class. You learn a few things but it’s not a must go. The baby is coming out anyway. And when your wife is in labor, you rapidly forget all these cute breathing techniques that you learned.
  • When your wife is in labor, as a dad, you are totally incompetent. That’s why they make you cut the umbilical cord, to justify your presence.GNARL3
  • I’m a parent and my baby has displayed a lack of interest in being parented. I told her that if you are going to raise yourself at least do a good job.
  • Once my baby was born, I was shocked to learn that there’s wasn’t a postnatal class. There no such thing. You leave the hospital like you are leaving the grocery store except you are carrying a baby inside the house. It’s pretty much “here’s your baby and go figure it out”. Again my wife knew everything.
  • Then I quickly realized there’s no way in hell there’s a training manual for my baby.
  • As a dad, you’re in second place. Mom is the winner and it’s not even close. Mommy and baby can snuggle and read stories for hours. Maybe it’s the hair on my face.
  • I realized that the world is divided between parents and non-parents. There’s no in the middle. Sorry non-parents but the baby doesn’t come with a mute button.
  • Dear non-parents, having a dog is not like having a baby. Dogs come when you call their name. Babies don’t.
  • There seems to be two dominant schools of thought when it comes to sleep training. There’s the attachment parenting and the traditional parenting. Traditional parenting basically involves putting your kids to bed and listening to them scream all night. And there’s the attachment parenting, which involves cuddling your kids and then listening to them scream all night.


  • Babies don’t care how many whiskies you had the night before.
  • Sleeping babies often cry due to discomfort of some sort (hungry, diaper…). If you can find a way to defuse the problem immediately, they will return to a fully sleeping state. If you miss this opportunity to intervene, the results can be devastating for the entire household.
  • If the baby is not sleeping, nobody is.
  • When the baby is tired, you have a window of time to put your baby to bed. If you missed it, again the results can be devastating. You’ll be up for the next three hours with a tired cranky baby.
  • Moms are magical. They don’t sleep and they have more than two arms. And they know everything.
  • Day cares are basically labs for new diseases and viruses. You want to take down ISIS? Send a toddler with a runny nose.
  • There’s no point of going anywhere in the winter. By the time I got my baby inside a snow suit it was already spring thaw. If you a parenting pro and managed to get your baby all zipped up, they have to go to the bathroom.
  • If you do need to go somewhere, it looks like you are moving. There’s the stuff the baby needs, there’s the stuff the baby wants, and there’s the “what if” stuff.
  • NEVER say the word “i-c-e c-r-e-a-m” in front of kids.
  • If leaving the house with kids is impossible, try leaving the park. The longer they stay, the more tired they are, the more difficult it is to leave without a crisis. But you stay longer because you want to be a good dad. It looks awkward if you leave before its time. Try the word “i-c-e c-r-e-a-m” to get the troops in line.
  • Baby music has some very depressing origins. For example, the charming rhyme “Ring around the Rosie” refers to the Black Plague that decimated Europe’s population. In “Old Macdonald had a farm”, Macdonald HAD a farm. What happened to the farm? Did the bank take it?
  • Can the geniuses at Fisher-Price come up with a toy that’s more fun than a toilet-paper roll?
  • Just like cats, your baby will enjoy the box your gift comes into more than the actual gift.
  • Unlike cats, you can’t leave a tray of food on the floor with cereals in it for your kid to eat it in the morning. I have the ceremonial role of getting up in the morning because my toddler is “starving” and for some odd reason my “starving” toddler doesn’t want to eat anything presented.
  • When eating, my baby’s food knows where to find her hair, ears, eyes, face but rarely the mouth. My baby girl doesn’t bother to eat over her plate. If she realized how much there’s under the table maybe I wouldn’t get up so early in the morning. Drinks however are spilled on the table. This is where babies can wreak the most havoc. Kids are fascinated by spills. Whoever invented the sippy cup should be the richest person alive.


  • In the morning, do not get fully dressed for work until you have to step out of the door.
  • Silence is a luxury. It was silent the other day and it woke me up. If you are lucky, your baby might sleep at night and you get a moment of silence but the night ends very quickly.


  • To whoever said that “it takes a village” to raise a kid, well I want to move to that village.
  • My village is not adequate. So far it would take more than a village to raise my baby.
  • Whoever came up with “terrible twos” must feel pretty silly when they turn 3.
  • Expect them to be in the house until they are 30. My baby is still unemployed and doesn’t pay rent.
  • If you are going to give clothes, make sure they are made of velcro. Snaps are ok but make sure the snaps are aligned. Buttons are just plain evil.
  • It’s amazing how little kids cans spend hours in the pool without having to go to the bathroom.
  • When I was a young I remember thinking that dads are the ultimate boss and kids were slaves. I had it backward. I’m the slave and the baby is my master.
  • Babies don’t learn how to walk, they run. They run into things.
  • Watching a toddler is a little bit like keeping an eye on somebody on suicide watch. I’m not sure what I did, but my baby is always trying to find new ways to hurt herself. My whole job is to keep her alive. My baby girl’s approach can be described as “run head first into the coffee table”. She is fearless, a climber and a jumper.
  • My baby girl doesn’t speak English or French but somehow she has mastered the art of negotiation. Why does everything turn into a negotiation?
  • Kids don’t process that you are talking to them when they are watching T.V.
  • Kid shoes should come in pairs of three.
  • Kids have no awareness when they have to go to the bathroom. And if they ever do, there’s no bathroom nearby.
  • Kids might not know the value of money but they know the value of candies. Candies are the kids’ currency. That’s how they make friends and get stuff.
  • It feels like my wife gave birth yesterday. What I’m saying is that they are growing way too fast and you are going to miss the cute little things they do. Enjoy the moment.
  • Remember all the nonsense your parents said when you were a kid, well you finally piece it together. They tried their best.
  • My virility caused this whole situation.


The Gap Between The “Real World” and School

50 G.O.P. Officials Warn Donald Trump Would Put Nation’s Security ‘at Risk’

Last week I included a letter by a former deputy director of the CIA explaining his endorsement for Hillary Clinton and on why Donald Trump is not qualified to by the next President of the U.S.A.

This week, fifty of the nation’s most senior Republican national security officials, many of them former top aides or cabinet members of former Republican administrations have signed a letter declaring that Donald J. Trump “lacks the character, values and experience” to be president and “would put at risk our country’s national security and well-being.” This comes on the top of several Republicans to publicly announce that they would not be supporting the GOP presidential nominee. Mr. Trump, the officials warn, “would be the most reckless president in American history.”

Below is the full statement:
Continue reading “50 G.O.P. Officials Warn Donald Trump Would Put Nation’s Security ‘at Risk’”

I Ran the C.I.A. Now I’m Endorsing Hillary Clinton

Below I reposted a solid article by the former deputy director of the Central Intelligence Agency, Michael Morell. The article is clear, rational, and straight to the point.  What you would exactly expect from a CIA guy. With so much nosense floating around, this article is refreshing.

Repost from the New-York Times
I Ran the C.I.A. Now I’m Endorsing Hillary Clinton.
By Michael J. Morell

During a 33-year career at the Central Intelligence Agency, I served presidents of both parties — three Republicans and three Democrats. I was at President George W. Bush’s side when we were attacked on Sept. 11; as deputy director of the agency, I was with President Obama when we killed Osama bin Laden in 2011.

I am neither a registered Democrat nor a registered Republican. In my 40 years of voting, I have pulled the lever for candidates of both parties. As a government official, I have always been silent about my preference for president.

No longer. On Nov. 8, I will vote for Hillary Clinton. Between now and then, I will do everything I can to ensure that she is elected as our 45th president.

Two strongly held beliefs have brought me to this decision. First, Mrs. Clinton is highly qualified to be commander in chief. I trust she will deliver on the most important duty of a president — keeping our nation safe. Second, Donald J. Trump is not only unqualified for the job, but he may well pose a threat to our national security.

I spent four years working with Mrs. Clinton when she was secretary of state, most often in the White House Situation Room. In these critically important meetings, I found her to be prepared, detail-oriented, thoughtful, inquisitive and willing to change her mind if presented with a compelling argument.

I also saw the secretary’s commitment to our nation’s security; her belief that America is an exceptional nation that must lead in the world for the country to remain secure and prosperous; her understanding that diplomacy can be effective only if the country is perceived as willing and able to use force if necessary; and, most important, her capacity to make the most difficult decision of all — whether to put young American women and men in harm’s way.

Mrs. Clinton was an early advocate of the raid that brought Bin Laden to justice, in opposition to some of her most important colleagues on the National Security Council. During the early debates about how we should respond to the Syrian civil war, she was a strong proponent of a more aggressive approach, one that might have prevented the Islamic State from gaining a foothold in Syria.

I never saw her bring politics into the Situation Room. In fact, I saw the opposite. When some wanted to delay the Bin Laden raid by one day because the White House Correspondents Dinner might be disrupted, she said, “Screw the White House Correspondents Dinner.”

In sharp contrast to Mrs. Clinton, Mr. Trump has no experience on national security. Even more important, the character traits he has exhibited during the primary season suggest he would be a poor, even dangerous, commander in chief.

These traits include his obvious need for self-aggrandizement, his overreaction to perceived slights, his tendency to make decisions based on intuition, his refusal to change his views based on new information, his routine carelessness with the facts, his unwillingness to listen to others and his lack of respect for the rule of law.

The dangers that flow from Mr. Trump’s character are not just risks that would emerge if he became president. It is already damaging our national security.

President Vladimir V. Putin of Russia was a career intelligence officer, trained to identify vulnerabilities in an individual and to exploit them. That is exactly what he did early in the primaries. Mr. Putin played upon Mr. Trump’s vulnerabilities by complimenting him. He responded just as Mr. Putin had calculated.

Mr. Putin is a great leader, Mr. Trump says, ignoring that he has killed and jailed journalists and political opponents, has invaded two of his neighbors and is driving his economy to ruin. Mr. Trump has also taken policy positions consistent with Russian, not American, interests — endorsing Russian espionage against the United States, supporting Russia’s annexation of Crimea and giving a green light to a possible Russian invasion of the Baltic States.

In the intelligence business, we would say that Mr. Putin had recruited Mr. Trump as an unwitting agent of the Russian Federation.

Mr. Trump has also undermined security with his call for barring Muslims from entering the country. This position, which so clearly contradicts the foundational values of our nation, plays into the hands of the jihadist narrative that our fight against terrorism is a war between religions.

In fact, many Muslim Americans play critical roles in protecting our country, including the man, whom I cannot identify, who ran the C.I.A.’s Counterterrorism Center for nearly a decade and who I believe is most responsible for keeping America safe since the Sept. 11 attacks.

My training as an intelligence officer taught me to call it as I see it. This is what I did for the C.I.A. This is what I am doing now. Our nation will be much safer with Hillary Clinton as president.

Michael J. Morell was the acting director and deputy director of the Central Intelligence Agency from 2010 to 2013.