 Good day, fellow investors. In the last few weeks, I have received probably more than five tips from various sources to look into Porsche as a stock. And as a stock market researcher, as that's all what I do, I said, okay, let's look, let's see whether that is extremely and undervalued as all of those five individuals told me. So here is my findings, my views of on Porsche and on the largest core holding of Porsche Volkswagen. So I've read a few hundred pages of reports on this and shortly summarize what I have found. The content is Porsche SE ownership of Volkswagen and holding discount Volkswagen stock analysis undervaluation relative and absolute personal opinion and conclusion. So let's start with what is the deal Porsche SE is a company holding Porsche's family stake into Volkswagen. 2007, eight, nine somewhere there, Porsche tried to take over Volkswagen. They didn't make it. And to save them later, Volkswagen took them over. As part of the deal, the Porsche family got shares into Volkswagen. And here is the following holding structure. Porsche owns 52.2% of ordinary shares. But with the preferred shares that have voting power, they own 30% of the company, Volkswagen owns brands, Volkswagen, Audi, Seat, Skoda, Bentley, Bugatti, Lamborghini, Porsche, et cetera, trucking men, Scania. It's important to note that the Porsche family has all of the voting shares. So you can only buy preferred preference shares in the Porsche stock. It's also traded as an ad year for American investors on the New York Stock Exchange, also Volkswagen. Now Volkswagen has 501 million shares. And the stock price was 141 euros for a market capitalization of 71 billion. Everything that I discuss here will be in euros as euros is what the companies use. 360 million shares is Porsche's number of shares outstanding. The price is 54 euros per share on a market cap of 16.7 billion. 16.7 billion is 24% less than what is the actual ownership. 30.8% of Volkswagen is 21.8 billion. So there you have a 24% holding discount when you buy Porsche instead of buying Volkswagen. The discount is sometimes bigger and sometimes smaller as the stocks don't really trade in sync. In any case, buying Porsche gives you a 24% discount on Volkswagen. So we have to analyze Volkswagen and see it, okay, whether this is a company worth buying and then buying through a discount. Volkswagen like any other car company is a cyclical and you have to put it into that bin or folder. Cyclicals do very well when the economy is doing good and terribly when the economy is slowing down as companies buy less cars, everybody buys less cars. However, you can only postpone a purchase of a new car for a year or two, sometimes a bit longer if it's a really bad recession, but then usually buyers rush back to replacing their old cars with new cars, which again reinforces the new cycle and with the new cycle begins. Can we predict the cycle? I don't think it's possible to do accurately, especially with all the central bank interventions. So what I prefer doing is simply estimate a recession every five years, see how an average one would hit the company, see how the company is doing when things are fine, like those have been in 2018 and get to average earnings that we can use to calculate intrinsic value. In my book Modern Value Investing I analyzed Daimler as an example where I applied the 25 tools that I discuss in the book and when writing the book the stock price was 77, my fair value was closer to 40 and fortunately for my book sales and my book readers the stock is closing down on the second price, not the 70 but the 40. As there are fears of a recession the stock falls when the sentiment is more upbeat, the stock is up, therefore one has to buy such cyclical stocks when there is blood on the streets. However, before buying one must know what would be a good business price to pay for a decent long-term business earnings return. Let's see, Volkswagen Group hopes to increase their return on sales by 1.5 percentage points up to 2025, given that sales are 230 billion it would not be a bad thing. But just to stay conservative let's say they don't improve there on that side, however on the cash flow they have their benchmark at 10 billion per year, a level that they can achieve and have been achieving that would be what 4% net cash flows on sales, that's possible also in the highly competitive automotive industry. So in a bad year cash flows will probably be between 0 and 3 billion, in a good year they will be between 10 and 12 billion and 8 billion in an average year. In a cycle let's say we will have two good years, two average years and one bad year, I would say that their net cash flows would be then around 8 billion per year over the next 5 to 10 years with ups and downs depending on the cycle. The industry is highly competitive so this is what one should expect, 8 billion on a 70 billion market cap implies a cash flow yield of 11% that is not bad. I have to see what is the story behind the 8 billion in cash flows in the 5 year strategy plan conference webcast, the finance board member discusses how they expect to reach 30% earnings dividend payout close to the cash flows are the earnings, so that would be what 3, 2, 3 billion in payouts on a 70 billion market cap which is still not that high. 30% of the 25 earnings per share is 8.3 that on this 141 stock price would imply dividend of 5.8%. This might be good in Europe but this is not good from my absolute investing perspective, I always target for 15%, 10 to 15% or even 20 that can become in the future. The positive scenario would imply a 10 euro dividend that's still just 7%. The 7% dividend yield from Volkswagen would be a 9.1, let's say dividend or ownership part in Porsche, if I own Porsche SE so this doesn't come even close to my required 15% return if a lot of things develop well from now up to 2020. However that's the absolute investing return but as we are in the business of investing let's discuss the market's perspective on Volkswagen remember all the brands Volkswagen has well let's start with Audi is traded on a stock exchange with a market cap of 33 billion and Volkswagen owns 99.64% of it so add 33 billion to the valuation. Volkswagen also plans to IPO Trayton the truck transportation division in April of this year for about 6 billion where they expect to list 25% that would value the company at 24 billion. Let's say 20 billion for Trayton as the 24 billion might be a bit high so already Audi and Trayton are just 53 billion in market value. Then we have the car brands and makers Volkswagen Škoda SEAT that should also be worth at least 30 billion 5 and 5 billion respectively thus we are at 93 billion already and not to forget Porsche the actual car company not the holding company that should also have some value Ferrari is just an example that's put off out of Fiat Chrysler a few years back has operating cash flows of 400 million and the market capitalization of 20 billion euro in Porsche in 2018 Porsche had operating cash flows of 4 billion that would leave at least 2 billion in cash flows at the same valuation as Ferrari you're at 100 billion which is a little bit crazy but let's put it at 25 billion then there is the financial services with 2.5 billion operating cash flows let's say we are at 10 billion there Lamborghini Bugatti Bentley must be worth something too but when I see some things up I get to 128 billion in the market value so if they start spinning off companies listing them or giving them as dividends they really might unlock that market value and increase the market capitalization from 70 billion to 128 billion so from this perspective yes Volkswagen is extremely undervalued but you're playing on what the stock market will say not on the earnings not on the dividends if you are happy with the dividend in the meantime then you can play this it's a lower let's say it's an asymmetric risk reward situation the risk is always there that there will be a recession in stock we will drop but the upside is also there if there are some improvements on corporate structure my personal opinion to conclude I see where the undervalued perspective comes from but that is relative value investing and not absolute value investing and I focus on earnings thus absolute returns and I can find better than what now Porsche and Volkswagen offer if you look around the world plus there are large liabilities on Volkswagen's balance sheet high forward expected investments where 44 billion will be invested in the electric vehicle's trend which make me stick to my yield expectation when where I would at least expect a 15 yield which means Volkswagen or Porsche have to decline at least 50 percent for me to take a serious interest so you never know perhaps in the next recession if not until then I have other fish to fry thank you for listening looking forward to your comments