Best holding this month: Stillfront
The stock market was down in August. The Stockholm exchange fell 1.2% and the small caps index was down 0.9%. Carnegie Småbolagsfond rose 2.3%.
Stillfront was the best holding for Småbolagsfond in August, with a gain of 23%. The strategy game developer had an eventful summer. After completing a clear value-creating acquisition of Canadian Kixeye and then a new issue earlier this summer, a very strong interim result for the second quarter was published in August. The company is doing most things right. A combination of organic growth, good profitability, value-adding acquisitions and financial expertise provide an attractive whole.
The profit trend for chicken company Scandi Standard has been decent but has not quite met our expectations. The reason for our long-term view is that demand for chicken and Scandi Standard’s sales growth have always been very good. This is the most important part of our analysis; it is easier for a company to deal with profitability as long as sales growth is good. We believe that chicken consumption will continue to develop positively, driven by health, the environment and value for money.
Given its cyclically stable nature and an unchallenging valuation, the share is still attractively valued despite rising 20% in August.
The fund’s largest holding, AtriumLjungberg, had a strong month, rising 13%. The low and falling interest rates have not escaped anyone’s attention. This is an attractive environment for real estate companies since interest costs are usually their single largest expense item. In a wider perspective, low interest rates are driving up prices for real estate. Since most interest rates are negative, institutional investors are chasing returns so we would not be surprised if the required return on property decreased, meaning the price of property would rise further.
At the beginning of September, it was announced that AtriumLjungberg will be included in the European EPRA index. We do not usually attach much importance to index issues, but EPRA is followed by many large institutional investors so it could have a positive effect on the AtriumLjungberg share when this index weight is implemented. The share is still attractively valued in relation to its net assets.