Cobas Asset Management is a Madrid deep-value firm founded in late 2016 by Francisco García Paramés, Europe's standard-bearer of value investing after 25+ years running Bestinver and author of "Investing for the Long Term". Cobas applies a strict Graham/Buffett value framework overlaid with Austrian business-cycle theory, concentrating in unloved energy, shipping and other cyclicals, with AUM above €3.4bn. Its investor letters are fully archived from Q1 2017, moving to a semi-annual cadence in 2022.
This report explains how the Cobas fund built its portfolio in early 2017. The manager bought stocks that had fallen over 50% in three years (like BMW preferred shares and Samsung preferred shares), while the market rose 19%. He believes these companies are undervalued and could rebound 70%. For everyday investors, it shows that when the market is high, you can find bargains in beaten-down stocks—especially those with lots of cash and family ownership, which are safer. It's worth reading for a clear example of contrarian investing.
The Cobas Selección Fund’s first-quarter 2017 report shows that 92.7% of the fund is invested in 53 stocks, of which 8 Iberian stocks account for 5.7%. The core thesis focuses on high-quality, undervalued companies, with the top ten holdings representing 46% of the portfolio. Portfolio characteristi
This chapter is the opening of the Cobas Selección Fund's first-quarter 2017 report, introducing the portfolio structure, geographic distribution, and core characteristics after the fund completed its position-building. The author emphasizes that the fund gradually built its positions in January 2017, forming the target portfolio by the end of the quarter, focusing on high-quality, undervalued stocks.
The author's core investment argument is that the top five holdings in the current portfolio have depreciated by over 50% in the past three years, while the market rose 19% over the same period. The market's pricing of these companies is excessively pessimistic, presenting significant buying opportunities. The author believes that the fundamental value of these companies has not declined proportionally, so the portfolio has a 70% revaluation potential. This judgment runs counter to market consensus, as the author actively bought sharply declining stocks when major markets were at historical highs.
| Metric | Performance Over the Past Three Years |
|---|---|
| Top five portfolio holdings | Depreciated over 50% (some fell 80%) |
| Author's classic stock portfolio | Accumulated rise of 50% |
| Market (reference index) | Rose 19% |
The author believes that the market overreacts to price changes, with valuation declines far smaller than stock price drops.
The report categorizes portfolio companies into three groups:
The author is broadly bullish on the above companies, expecting "very significant revaluation."