July 7th, 2022 | 14:27 CEST
Asset mix: Allianz, Nordex, Globex Mining - What belongs in the portfolio now?
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Born in Bielefeld, she studied German, English and psychology. The emergence of the Internet in the early '90s led her from university to training in graphic design and marketing communications. After years of agency work in corporate branding, she switched to publishing and learned her editorial craft at Hubert Burda Media.
Nordex: How profitable are renewable energies such as wind power in Germany?
Sustainability-oriented investors are increasingly flirting with renewable energy stocks. Wind power is one of them. However, strong returns are currently not to be expected from Hamburg-based Nordex SE (ISIN DE000A0D6554). The renowned asset management company Stifel downgraded the Nordex share from Buy to Hold with a price target of EUR 9. The stock is in a continuous downward trend and currently stands at EUR 7.69.
In June, the Group closed its rotor blade plant in northern Germany in Rostock. A decision that the Company announced back in February 2022. A transfer company was set up for the 600 employees. From a management perspective, the closure came at the right time because energy prices have risen immensely for every site in Germany and for some industries, the entire production is on the line. According to Bloomberg, the Chairwoman of the German Federation of Trade Unions (DGB) Yasmin Fahimi reports "Because of the gas bottlenecks, the permanent collapse of entire industries is imminent: Aluminum, glass, chemicals."
In recent years, Germany as a business location has become fatally dependent on Russian gas. As a result of the conflict in Ukraine, sluggish developments in alternative energy supplies and the decision to phase out nuclear power, there is a frantic search for ways to maintain production and the associated jobs in the country. Nordex is thus caught in the middle of the consequences of a sleepy energy policy. The share price reflects the current problems. However, investors should not only consider geographic location when looking at wind turbine manufacturers but the return trends of the entire industry.
The global wind power market size was estimated at EUR 96.8 billion in 2021 and is expected to grow at a compound annual growth rate (CAGR) of 6.5% from 2022 to 2030. The growing need to replace conventional energy sources with renewable sources is expected to drive the wind energy market in the coming years.
The extent to which the Nordex share has struggled over the past two years becomes clear when compared to the First Trust Global Wind Energy ETF (ISIN US33736G1067). While the ETF rose 19.88%, Nordex stock fell 12.96%.
Globex Mining - The mineral bank as an alternative to gold in the bank vault
Investing in precious metals such as gold, platinum and silver is something people like to do more of during economically volatile times. But rather than investing directly in just one metal, publicly-traded explorers offer a fresh perspective on broadly diversified investment opportunities.
Globex Mining (ISIN CA3799005093) is a company that describes itself as a mineral bank. It is comparable to an incubator for the world's most sought-after metals. The business model is structured like a continuous value chain, and the experienced team specializes in acquiring mineral-rich properties and claims. Once these are in their possession, they refine the newly acquired assets with an up-grade: this is done primarily through surveys for mineral resources by (the actual exploration).
revenue Globex Mining generates through options, shares and royalties. This approach results in extremely low dilution of shares outstanding. The money is invested in further exploration that leads to new mineral deposits. In addition, they develop the sites to the point of production and sell some projects at a profit. That allows investors to participate in a variety of value-creating processes.
Globex Mining Enterprises Inc. was founded over 60 years ago. Its explorations are located primarily in Europe, Canada and the United States. The Company is debt-free and has cash reserves of EUR 19.6 million, treasury stock and realizable collateral.
Its broadly diversified portfolio includes areas with mineral resources of copper, zinc, lead, and nickel - among precious metals, deposits of gold, silver, palladium and platinum predominate. They also hold rare earths, which are in particular demand for the energy transition. Instead of just a precious metal in a bank vault, Globex Mining is like a bank for minerals with increasing value creation.
Allianz SE: Share price hovers at EUR 176, analysts see a target price of EUR 264
Warren Buffett has built a fortune investing in insurance companies like Geico. Allianz Group is one of the world's leading insurers and asset managers, with 126 million private and corporate customers in more than 70 countries. Allianz SE (ISIN DE0008404005) is the holding company of the Allianz Group. With its broad range of reinsurance products, Allianz SE addresses, in particular, the operational insurance units of the Allianz Group (intra-group business) but also third parties (external business). The product range includes proportional and non-proportional reinsurance covers for property, casualty, life and health insurance.
The Allianz SE share is currently trading at around EUR 176. In March 2020, at the beginning of the Corona pandemic, the share price fell to EUR 146. Only in the last investor presentation Allianz SE was able to strengthen the confidence of its shareholders because, according to a note from Berenberg analysts Michael Huttner and Thomas Bateman, the regional and specialized units account for 15% of the operating profit. The impact of inflation on the German insurer - negative in the property business but manageable - and higher interest rates - which are expected to add EUR 400 million to investment income in 2022 - are now seen more clearly, the analysts said.
Allianz SE is considering reducing its investments in equities and buying more bonds, as bond yields are currently very attractive. Analysts said this could increase solvency and support the view that Allianz SE could announce more buybacks later in 2022. According to Q1 2022 results, the Group remains on track with its EUR 1 billion share buyback program and has so far acquired 2.4 million shares for EUR 500 million by the end of April 2022. The Solvency II capital ratio stands at 199%. Solvency II is a reform project of the European Commission to establish new solvency rules for insurance companies.
Berenberg recommends the share as a buy with a target price of EUR 264. On August 5 2022 Allianz Group publishes its Q2 2022 results, while investor Ray Dalio and his Bridgewater Hedge funds continue to bet on falling share prices, predicting dark times ahead for Europe and the West. His biggest bet is the Allianz share with a volume of EUR 388 million.
Investments in Germany as a business location, such as Nordex SE, face the challenges of skyrocketing energy prices and the supply of the corresponding materials and have to close production sites for various reasons. Wind power in itself has proven to be a growing investment over the last two years. The energy turnaround is succeeding doggedly with unwavering tenacity. Alternatively, if you're betting on classics like insurance companies, Allianz SE can be a jolting ride - if well-known hedge fund investor Ray Dalio is to be believed. Analysts are somewhat more optimistic about the share's performance. Those thinking about precious metals and metals in general as an investment should look closely at the mineral bank Globex Mining. The business model along the value chain, the high cash reserves and the freedom from debt offer risk-averse investors unimagined opportunities for value growth.
Conflict of interest
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