Sow this would mean for instance 5x 1% positions as a “French basket”.ĭISCLAIMER: The author privately owns already some of the discussed shares It would also be great to know if there are other interesting blogs and resources for French small caps like valueinvestingfrance.įor the portfolio I am actually thinking of taking a “basket” approach as it would take ages to build up a position in any of those stocks. or if you have researched companies on the list. However I would really appreciate if readers who have other interesting French stocks on their radar to shoot me a comment etc. I will try to write a post for each of the “Top 10” companies in the coming weeks. Tessi (good post at valueinvesting france)Ĭhargeurs (another Seth Klarmann / Baupost position) Other interesting small caps which I haven’t researched deeply but might be interesting are: Swimming pool manufacturer, cheap, Royce has built up a 7.6% position in 2011Īll those companies are plain vanilla “old economy stocks” who score incredibly well on my “boring but sexy” screen which combines ROE, volatility of ROE, growth, and solidity of balance sheets relative to price over 10 years. Extremely cheap on an EV basis because of large cash position Specialist for aluminium products, very profitable. However, in order not to make it too exciting, I will reveal my current “TOP 10 watchlist” of potentially interestign French stocks which there are:Ĭhimney manufacturer, consistent profit growth, single digit P/E The CAC Mid 600 Index for example tardes at an 12x forward P/E which is almost the same as the German MDAX. Interestingly, French small cap indeces are relatively expensive. Current P/E for the CAC 40 is 10.1 with a dividend yield of 5.3% against a P/E of 13.1 and dividend yield of 3.7% for the German DAX. So based on very simple metrics, there seems to be a bigger selection of “cheap” French companies than German companies.Īlso when we look at the indices, France looks comparatively cheaper than Germany. If I include a required minimum Dividend yield of 1.75%, I only get 32 German companies, but 84 French companies. So I would say that especially the smaller French stocks look really “neglected”, both by international and local investors.įor instance if I search for stocks with P/B less than 1 and a “single digit” P/E, I find 131 French companies against only 101 German companies. – disclosure in French reports is often relatively limited Sometimes it is hard to find news, even on company web pages. – many of the smaller companies only report in French, which (thanks to Google translate ) is not a big problem anymore but might turn off some potential Anglo Saxon investors. Don’t expect super efficient use of capital either. M&A activity (take overs ect.) is also relatively limited. French companies either reinvest or keep a lot of cash on the balance sheet. One usually doesn’t see a lot of share buy backs etc. – “shareholder value” seems to be still a kind of “dirty word”. Some stocks trade only twice a day at very small amounts. So many small caps have a large majority owner and several long term 5% stakes. I guess this has to do with a preferential treatment of 5%+ psoitions under French tax rules. – liquidity for French small caps is sometimes extremely limited. I know only of and the quality of posts there is usually quite low – there is hardly any blogging or internet scene for French stocks. – French companies, especially small caps are usually less leveraged and run more conservatively than their Italien or Spanish peers I am definitely not an expert in French stocks and the French investment scene, but I would summarize my experiences up to now as follows: General observations about French stocks: If we look at what I would call the “Small cap sweet spot”, 25-200 mn EUR market cap, we get 242 French companies against 498 companies in Germany. Not surprisingly, France has more “big” companies with market caps above 5 bn EUR (45) vs Germany (35). Total market Cap for French companies is 1.09 bn (European “billion” or Amercian Trillion), slightly higher than the 1.02 bn/tn currently shown for Germany. So far, I have been reviewing 4 French stocks in more detail:įrom those four stocks, only Tonnelerie made it into the portfolio as a “Hidden Champion”.įrance, as the second largest EUR economy has a lot of listed companies.īloomberg shows 847 listed companies based in France, a little less than Germany with 1110 companies, but more than Italy (304), Spain (201) and Portugal (67) combined !!!