The magic of vintage shares

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  Martin Raab
  Investment-Stratege

The major share indices, above all the Nasdaq 100 Index, are shining like freshly polished classic cars – gleaming on the outside but creaking under the hood. If you look closely, you will see that the majority of individual stocks are chugging along behind the index, while a few large-cap AI superstars and tech blockbusters are keeping the party going on their own. It is not uncommon for around ten stocks to currently directly determine half of the index returns. It’s as if only five cars are sprinting ahead in a race and the remaining 10 start to stumble after just a few kilometers with smoking engines. Looking at the last 6 months of the Nasdaq 100 Index and the Dow Jones Index, it is clear that the supposed “race to catch up” has been superficially successful – but many individual stocks have turned south. In the DAX and SMI, the index trend already looks clearly slowed down, forced to stop after a high-speed race.

Eyes on the niches

For investors, this means a wonderfully paradoxical situation: the index looks strong, but in reality there are a number of shares lying by the wayside like bargains. Especially those that have nothing to do with AI in the press release. And this is exactly where the real value investments are now lurking. So why celebrate the AI boom when the price rockets are already flying through the atmosphere overheated? It is more exciting to rummage around in sectors that have boring industry gems, solid niche players or underestimated players.

Vintage Value at Givaudan, Leonteq, UPS, Adobe, Public Storage

Specific examples of Swiss equities include Givaudan (CHF 30 bn market cap niche player with soon to be new CEO and strong cash flows vs. peers) and Leonteq (only 290 million market capitalization and completely undervalued active business). On Wall Street, the shares of logistics giant UPS are at a record low (USD 6 bn cash in hand, USD 3.5 bn free cash flow!). Anyone looking for AI and IT flair in value stocks should take a look at Adobe. Almost USD 10 bn free cash flow and still the global software leader for all creative people who use AI to create photos and videos commercially. Finally, if you want something totally vintage, you should take a look at Public Storage shares. The company earns two billion dollars a year in free cash flow from dusty storage rooms! More vintage value is almost impossible. As we all know, outperformance rarely comes from the corner where everyone is already applauding – but rather from where no one is looking.