Portfolio

Below is a very brief write up of the businesses in my portfolio. This is not financial advice, nor is it a solicitation to buy or sell anything.

First, lets talk a little bit about the portfolio as a whole. Since the start of the pandemic, I have been trying to maintain a concentrated portfolio. Before 2020 I would probably hold somewhere between 20 and 25 positions, simply because I liked looking for companies, and then didn’t really read up on them enough to be confident to take real size. This current portfolio is one I am actually quite happy with, it has 1less than 15 positions, weighed roughly according to conviction.

Cash + Global Index fund: Currently, this is only in cash, and it a historically relatively small cash position. In times where I have had a larger cash position, I have put parts of it into a global low cost index fund. For many years I held too much cash, and the index position is a new thing I have been experimenting with and it has paid off in the miasma of market stimulation. At its largest, I think the index position was close to 20% of the total portfolio, which gave much better return than just cash.

Teqnion is a relatively small industrial group, led by what I deem an energetic CEO with a long term mindset. They aim to grow through acquisitions and organically, which they have done quite successfully. The organic growth has been quite severely hit by the pandemic, but they have managed to complete some acquisitions. I like the historical profitability and margins, and I think they can manage to build a solid and respectable firm. This position has been my most successful position ever in terms cash return. It has thus had quite a good run looking back a year, but I think they can at least somewhat outperform the market.

Berkshire Hathaway probably doesn’t need an introduction. My expectations are market returns but with lower risk associated. Berkshire might be one of the best companies ever built, obviously biased as a huge fan of Buffett and Munger.

Nekkar is a great example of the value of Twitter. This is a case that I looked at because some profiles that I like and respect said that they liked the case, and so do I. The way I see this case is that they have a very profitable base within ship lifts, which is valued at what I deem quite an acceptable level. On top of this Nekkar is investing into two growth projects. One is an automated cage solution for farming of fish, and the other is some project directed towards wind power. This is not yet elaborated on, and both these are very early stage ventures. However, I do see good potential in both of these, and I think Nekkar is one of the better cases in my portfolio. See my Nekkar write up for more on this case.

Sohu is a case which started by me riding the coat-tails of a fantastic Swedish twitter profile @89Olle. I recommend reading his write up on the company here and I wholeheartedly recommend following him. Since this, I have done some work of my own, and you can find my write-up here.

Nordic Waterproofing are active within, you guessed it, water proofing materials. They have had good operational development, showing both organic and acquired growth, and a massive run up during 2020. I consider Nordic Waterproofing to have good margins, good growth, and good return on capital.

Embracer is a very popular Swedish stock, best described as a gaming roll-up. Read my writeup here

CAG is another IT consultant and is thus quite similar to Softronic. CAG however trades at quite a discount to Softronic, but with what I think is similar quality. CAG has had some recent issues with organic growth, but have completed some acquisitions, and I think the organic growth will be in level with the overall market for IT consultants. Since they are a bit cheaper than Softronic, I see this as one of the better risk/rewards in my portfolio currently.

Alphabet probably don’t need an introduction. I think this is one of the best stocks in the FAAMG family, a great business, and when I bought Alphabet it even traded at a relatively low multiple.

Facebook is of course the F in FAAMG (or whichever acronym you prefer), and I think it is one of the most dominant busnisses right now. Together with Alphabet they have close to a duopoly position in online advertising, and they are one of the best at using data to make money. I think the extremely high profitability will continue going forward. Read my write up here for some more info.

Clas Ohlson is a retailer offering items such as hardware, tools, home items, electronics, and other odds and ends. They have had a bit of trouble even before the pandemic, for example engaging in failed geographical expansion, and a lacking e-commerce. The poor expansions have since been reversed, and they are currently showing good growth in online sales. I think the market is treating Clas Ohlson too harshly, especially when looking at a free cash flow basis.

Europris is a Norwegian low cost store chain, with a history of good growth and high profitability, and they have navigated the Norwegian lock downs very well. I think this can continue post pandemic, and thus it looks like a very cheap business. Both Europris and Clas Ohlson are similar cases, as they are somewhat a bet against the story of the death of retail. Thus they are almost to be considered as part of the same case, and should I change my mind on one of them, the other is likely to go at the same time.

Remedy Entertainment is one of my best cases in terms of percentage performance, but in very small size. Remedy is a Finnish game studio, probably most known for Control and Max Payne. I found this case after seeing what a great game Control is, and they have a pipeline of a few AAA-titles. One in co-operation with Epic Games. Remedy is trading at astronomical multiples, but I like the case on other merits and I’m going to hold onto my shares until the pipe-line has been somewhat emptied. I would not assume high returns from current levels simply because of the very very high valuation.

I want to reiterate, none of this is financial advice and I’m not your financial adviser. As is clear, I own all of these stocks and is of course biased. I may sell any of these positions at any time, and I don’t intend to be held responsible for your investments. Do your own research.

This posts main reason is to let me put my thoughts down into writing, so I can look back after closing the position, or whenever I am thinking “why the hell did I buy this”. I do highly recommend writing down your own cases, just so that you know what you were thinking as you purchased the position. Doing so combats several dangerous cognitive biases, and helps us as investors to learn from our mistakes and successes. It lets you answer the important question: “Did you get it right because of luck or skill?”.

Here I’ll list some exits, with short motivations, and the returns:

Rovio – Sold due to a very strange acquisition, and a generally disappointing report. About +/- 0

OEM – Sold due to very high valuation on an EV/EBITDA and P/E basis. About 100% return, dividends included

SOFTRONIC – Felt inadequate return given the risk at the valuation. about 20% return plus dividends

FGNA – Didn’t feel like reading up on the deal terms, sold with a small loss

VIQ – Sold at about a 10% loss to free up cash for other opportunities where my own conviction is higher. Still holding in the cloning portfolio.