Value Investing During an Economic Crisis:The Case of Greece

Thomas Konstantinidis

The Economic Crisis and the Market Collapse

Greece: GDP & Unemployment rate 1996 - 2020

10%10%

11%

12%11%

11%10%10%

11%10%

9%8%

8%

10%

13%

18%

24%

27%27%

25%

24%

22%

19%

17%16%

0%

5%

10%

15%

20%

25%

30%

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Unemployment rate

0

50

100

150

200

250

300

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022

GDP € bn

-30%

Athens Composite 2007 – 2021

0

1000

2000

3000

4000

5000

6000

Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21

+4.5y -91%

+7.5y 0% 1.5y +80%

The Anatomy of a Bear Market

0

1000

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6000

Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21

The Apathy Stage

+7.5y 0% 1.5y +80%

0

1000

2000

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4000

5000

6000

Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21

The Guillotine Stage

+4.5y -91%

Athens Composite 2007 – 2021

THELESSONS!

8

THE LESSONS1. You need an Investment Process

InvestmentProcess

a. When to buy

• Buy when the market is falling

• Don’t wait for the bottom to be reached

• A few large steps

• Don’t bet the “farm”

• Embrace volatility

b. What to Buy

• Establish a program to buy below intrinsic value

• Valuation Rules

• Fundamental Analysis – Intrinsic Value

• Time Arbitrage

• Pre-Commitment

THE LESSONS2. Mental Weapons

“Intelligent investment is more a matter of mental approach

that it is of technique”

Ben Graham

a) “… on sales“

b) “mind our own business”1. Contrarian

2. Patience

3. Discipline

MentalWeapons

• Bottom-Up Valuation & Fundamental AnalysisWe implement an investment process which focuses on bottom-up fundamental analysis and seeks to invest in goodbusinesses with sound management that trade at a discount to their intrinsic value. We calculate intrinsic value based onthe no-growth value of normalized earnings, asset-based valuation and Private Acquirer Valuation methods. We invest ingood companies whose value is substantially lower from our appraised intrinsic value, ensuring that a margin of safety isachieved.

• Long Term Stock InvestorsWe aim to be long-term investors in our chosen stocks.

• High Conviction Portfolios We maintain concentrated portfolios of our best ideas. When there are not enough investment candidates available, weprefer to hold cash.

• Across the Capitalization and Industry Spectrum We take an unconstrained investment approach investing across the capitalization spectrum from micro-cap to large capand across all industries if there is a strong conviction for the purchased security. We are not tied to index or sectorweightings, but we maintain a fair industry diversification.

13

Our Philosophy

Patience Discipline Consistency

Points of Maximum Pessimism

“In a well-defined bear market many sound common stocks sell temporarily at extraordinary low prices. “

Ben Graham

0

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Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21

A B C

Athens Composite – Points of Maximum Pessimism

P/E Ratio Athens Stock Exchange 2010 - 2021

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2

4

6

8

10

12

14

16

18

20

Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21

Athex Comp. Portfolio excl Banks

A

B

C

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6000

Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21

A

Athens Composite – Points of Maximum Pessimism

The Ben Graham Period

• Net - Net

• Asset based companies

• Quality at attractive prices

• Large / Mid Caps

0

1000

2000

3000

4000

5000

6000

Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21

B

Athens Composite – Points of Maximum Pessimism

• Micro/Small Cap.

• Illiquid

0

1000

2000

3000

4000

5000

6000

Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21

C

Athens Composite – Points of Maximum Pessimism

The Pandemic Period

Greek Markets Today

21

The perfect search ground for a value investor

• Almost zero index representation

• Technically considered as an EM despite being in the Euro

• Not covered by analysts

• Illiquid

• It has inflicted a lot of pain to the investors in the past

Greek Market Today

Value Investing During an Economic Crisis:The Case of Greece

Thomas Konstantinidis