market folly

Continuing our series of notes from the Sohn London Investment Conference, next up is Bruno Rocha of Dynamo Capital.

Rocha co-founded Dynamo in Brazil in 1993. In 2006 he moved to London to set up an international fund focused on European equities. Dynamo is mostly a long term value investor with  a strong long bias and tends to favor stable businesses with solid and durable competitive barriers.

Rocha gave an impressive presentation about the elevator and escalator market which he has  followed since 1997. It is difficult to do the presentation justice as it contained so much detailed information:


Long Schindler Holding AG (SWX: SCHN)

- Dynamo started their position in Schindler in 2008
- Schindler is the second largest elevator company in the world
- Otis, Schindler, Kone and Thyssen are the largest players in the market
- Competition between the big four is mainly for new elevators but there is little competition in  the maintenance area as they tend to service their own products
- Schindler’s main market is in Europe
- 85% of profit is made from maintenance
- China is a big new market
- Elevators are a good business with growing revenues and margins
- Schindler’s recent growth has come from better elevators, growth in China and standardised global procedures
- Otis is the global leader and by comparison Schindler is a laggard
- Rocha argued that Schindler can catch up with Otis and he expects Schindler’s margins to get  closer to Otis by 2014


For the rest of the hedge fund presentations from this event, head to notes from Sohn London Investment Conference.