Veteran Leber ‘goes shopping’ for Grenke stock after short attack

Value investment veteran Hendrik Leber has used the short-seller attack on German leasing firm Grenke to add exposure to the company, Serge Debrebant reports from Munich.

Speaking to Citywire Deutschland, Leber said he has exposure to company across five equity funds and added 600,000 shares across the portfolios on Tuesday and Wednesday after Grenke’s share price dropped.

Grenke was subject to a scathing report from a British group called Fraser Perring and another firm called Viceroy, which led European equity investor Alexander Darwall to dump his entire position in the company.

However, Leber took the opposite view. ‘That’s a good discount. We did a lot of shopping,’ he said. ‘This is not about rebalancing, we have actively increased the positions.’

Leber said the short-seller attacks were not painting a coherent picture but were a collage of different ideas. ‘We believe the allegations are cheap. There may be points of contention here and there, but that doesn’t justify the attack for me. It lacks the pattern of action and the criminal element.

‘Of course you can never be 100% sure, but so far I don’t see that Grenke is comparable to Wirecard,’ Leber added. Leber sold all Wirecard shares in all Acatis funds in 2018 due to doubts about their credibility but had continued to monitor the situation closely.

Looking more closely at individual accusations, Leber said goodwill on Grenke’s balance sheet can be explained, as around €761m of the liquid funds are in an account with the Deutsche Bundesbank. He has dismissed concerns about challenges over possible failures, as highlighted by fund manager Barry Norris, as not posing any legal problems.

‘After the financial crisis in 2008, the company made mistakes when assessing defaults and learned from them,’ said Leber.

He added that it is a family business that Wolfgang Grenke built himself and the family retains more than 40% of the shares through an investment company. This is also evident from a list on 2 April on the website, where Acatis was listed as the third largest shareholder with 5.02% of all shares.

Acatis first bought shares in Grenke in 2009 and Leber has followed the company’s development ever since. He finds the business model convincing and said the specialist area of leasing is often overlooked by investors despite the ‘elegant system’ Grenke has in place.

 Leber added that he once worked as a consultant for the leasing division of a car manufacturer and gained insights into the leasing business. ‘You can often generate good margins in such forgotten niches,’ he said. ‘This company still has a good runway.’

The Acatis funds that are invested in Grenke include:

Translated from the original German. Additional reporting by Chris Sloley.

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