CFO has investment plan all figured out

Me & My Money Series (Sunday Times)

Mar 13, 2011
me & my money
CFO has investment plan all figured out
IT whizz has developed software for crunching numbers, volatility data
By Lorna Tan, Senior Correspondent

Mr Schuhardt, board director and chief financial officer of online tyre retailer Delticom, started developing software at 13. He used his skills to create a system that crunches figures and data to decide a selling price for each of his investments. The 41-year-old saves 80 per cent of his monthly pay and all of his bonuses. -- ST PHOTO: CAROLINE CHIA

As a teenager, Frank Schuhardt put his interest in computer software to good use by developing and selling software to local businesses.

By the time he was 26 in 1996, he had founded two firms with three friends, with an initial investment of $45,000, marketing derivatives pricing software. Although he is a majority shareholder in one of the two firms, Eller, Reif und Schuhardt, it is now dormant. He sold his stake in the other in 1998.

Mr Schuhardt, 41, is currently the board director and chief financial officer (CFO) of Europe's leading online tyre retailer, Delticom.

Listed on the Frankfurt Stock Exchange in 2006, it has 120 online shops in 39 countries. The German was in Singapore recently to complete a majority stake acquisition in home-grown online tyre retailer Tyrepac.

When it comes to his personal investments, Mr Schuhardt is careful to have an exit strategy for each of them, be it in shares, funds or commodities.

He has used his software skills to develop a system that crunches figures and volatility data to arrive at a selling price for each of his investments. Acting on these specific stop-loss criteria, his broker helps him execute sell transactions when necessary.

Mr Schuhardt graduated from the European Business School in Oestrich-Winkel, Germany, with a degree in business administration in 1996.

He then joined HSBC in Dusseldorf and London as an apprentice trader. When he left HSBC in 2000, he was the head of liquid bond trading.

After that, he became a partner at DVC Deutsche Venture Capital Gesellschaft, Munich, where he was responsible for investments in software and the Internet.

During that time, he also served as a non-executive board member of Delticom till 2005 when he left to run his own software business Eller. He joined Delticom as an employee in 2007.

He is married to insurance adviser Ilka Ruge, 36.

Q: Are you a spender or saver?

I would definitely put myself in the saver category. As a manager, I know that one must have a balanced mix of both traits. Grow, but profitably. I am frugal and not flashy. I save about 80 per cent of my monthly pay and all of my bonuses. My lifestyle does not exert too much pressure on my account balance - a couple of hundred euros a month is enough - not counting those wonderful and sometimes downright silly things that I like to buy for my wife and for our home.

Q: How much do you charge to your credit cards every month?

Like the company I work for, I am debt-free. Delticom, which is listed, has more than 40 million euros (S$70 million) in cash. I have one credit card and one company credit card. I always pay my bills in full. The money is deducted automatically from my bank account. I have never had any debt.

Q: What financial planning have you done for yourself?

I became financially independent about two years ago as my wife and I have accumulated enough savings to live on.

I use the software which I have developed to manage my investment transactions. My investment portfolio may have more than 200 'open' positions, trading in shares, indices, exchange-traded funds, hedge funds, gold bullion, silver and even some bets on the betting exchanges in Britain on certain events such as political outcomes and events.

I invest only in tradeable securities and only in many small lots. I set automatic stops in my investment transactions so my loss will never be higher than 3 per cent of my total investable assets, excluding my Delticom shares. The correlation in the various products I invest in is very low.

I don't have a target return for my portfolio.

For the past seven years, I have consistently achieved above 5 per cent returns each year. Besides, I have cash for a rainy day and other opportunities.

I own several life insurance policies and I have a life cover of about 670,000 euros. I pay annual premiums of 18,000 euros.

Q: Moneywise, what were your growing-up years like?

My father was a manager in a plant that produced industrial goods. My mother was a secretary. I am an only child. We lived in a two-storey house in a small village in the vicinity of Frankfurt.

I started to earn money by developing software in the 1980s when I was 13. I am fortunate to have parents who funded my college and university education. From then on, I have always had nice jobs with great teams and good pay. I have enough money for my loved ones and myself.

Q: How did you get interested in investing?

While studying in the United States during an exchange programme in 1993 and 1994, I got to know the financial markets.

My first job was at HSBC, where I finally ran its fixed income trading business. The trading floor was brimming with investment ideas, and that's where I really got into it.

Q: What property do you own?

I don't like owning houses. I have been travelling for my work and I don't know where I will retire.

My family owns some real estate in Germany. My father died a couple of years ago of cancer. My mother owns two houses - a one-storey and a two-storey - in Frankfurt. She lives in the latter and rents the other out.

The real estate prices in Germany are low - in the low six-digits - as they are not scarcity-driven, with sufficient land and the population decreasing.

If I do buy a house, it will be for my retirement plan, so I don't have to pay rent when I am old.

Q: What's the most extravagant thing you have bought?

Two things come to my mind: A hugely expensive high-end Naim Audio system bought in 1998 and a 1.2-carat diamond heart-and-arrows-cut engagement ring in 2003 for my wife. Both cost about 10,000 euros. I am very happy with both decisions.

Q: What's your retirement plan?

I will like to continue to have a great time with my family and my friends for as long as possible.

Q: Home is now...

I rent a two-bedroom apartment in downtown Hanover. It is approximately 3,200 sq ft.

Q: I drive....

I don't own a car.

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Thrifty

'My lifestyle does not exert too much pressure on my account balance - a couple of hundred euros a month is enough - not counting those wonderful and sometimes downright silly things I like to buy for my wife and for our home.'

Mr Frank Schuhardt

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WORST AND BEST BETS

Q: My worst investment to date...

Over the years, I have had so many investments which turned sour that I cannot pinpoint the 'worst' one. Here's an example. Between 2008 and last year, I invested in Twintec, a firm that produces exhaust filters for cars with diesel engines. I bought two lots at 14.36 euros in July 2008 and I sold them at 6.41 euros four months later. In July 2009, I bought two lots of the same counter at 6.9 euros and a few more lots in March last year at 13.25 euros apiece. I sold all the shares at 6.77 euros in November last year. In all, I lost about half of what I invested in the stock.

It hurt because it was something I should not have taken any bets on. I was betting that policymakers would force German car owners to buy such a filter and fit it to their cars. But they didn't.

Q: My best investment to date...

Well, the exception to my 'small lot' investing rule is my shareholding in Delticom, of course. Much of my personal wealth is tied up in Delticom shares. It is my most successful investment to date. I have 9,120 shares and it is trading at about 63 euros apiece currently. I'm a director at Delticom, so I have shares in the firm.