2018-08-15

“I got my black cat bones all pure and dry
I got my 4 leaf clovers all hanging high
I got my Mojo working but it just won't work on you”

Preston “Red” Forster – “Got My Mojo Working”

"Got My Mojo Working" is a blues song written by Preston "Red" Foster and first recorded by Ann Cole in 1956. Muddy Waters popularized it in 1957 and the song was a feature of his performances throughout his career.

But what is “mojo”?

A mojo is an amulet or talisman associated with hoodoo, an early African-American folk-magic belief system.  A more general definition is a quality that attracts people to you and makes you successful and full of energy, a kind of magic touch.

That’s what Austin Powers talks about in one of the Austin Powers series of 3 spy comedy films, produced some 20 years ago, when he says: “Who cares about SWAG, I’ve got MOJO Baby, yeah!”. In those movies, Austin (a James Bond parody) on a quest to bring his nemesis down (Dr. Evil). Obviously, Austin has some secret “Powers”, his so-called mojo, that Dr. Evil is keen, back in time, to take away from him, without ever succeeding.

“Has Kuehne got its mojo back?” asked a fellow analyst in a recent update research on the group. He had argued a few months back, that the group experienced some margin pressure and that the M&A story “lost some teeth”. I’d like to argue back that most M&A deals are like losing wisdom (teeth!). It’s like your dentist telling you: “Sorry your wisdom teeth are about to be painfully ripped from your gums and you’re paying money for it”. As for the margin pressure, my feeling is that it is only temporary nature, as turnover is currently growing double digit. My take is that Kuehne has MOJO, and never lost it (like Austin Powers!), in the first place.

Since 1890, when the business was founded in Bremen, Germany, by August Kuehne and Friedrich Nagel, Kuehne + Nagel has grown into one of the world's leaders in logistics. Today, the group has some 1,300 offices in over 100 countries, with around 76,000 employees. A provider of innovative and fully integrated supply chain solutions, it is worldwide Nr.1 in ocean freight, Nr.3 in air cargo and contract logistics, and Nr.6 as a European Road & Rail provider. Kuehne & Nagel has clout, second to none, in its field. Even though ocean freight is a very fragmented market, its value proposition to clients, as well as its outstanding lean & mean organization, makes it a very powerful “economic moat”. Not an easy model to replicate!

Yes, the company is not cheap – our “owner’s earnings” standard calculation shows an operating cash flow yield (minus maintenance CAPEX) of 6.2% but its return on invested capital, in excess of 40%, belongs to the Premier League.

 “Groovy Baby! Who cares about SWAG when you’ve got MOJO!”

Austin Powers