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Great expectations for the reports

Global economic growth has been a pleasant surprise, giving a boost to cyclical shares in particular. The flipside is the potential for inflation worries to gain ground and flourish. This has caused long-term interest rates to shift upward, especially in the United States where the 10-year government bond is now close to tipping above 3 percent.

Stock market movements were fairly small overall in January and the same applied to credit spreads, while longer maturity government bonds decreased somewhat in value. The dollar softened against most other currencies despite all the positive signals from the US. The fund rose 0.6 percent in January.

The strong economic climate has driven up the expectations for company reports, and even slight deviations have in some cases led to large share price movements for companies that have so far published their Q4 statements. Low volatility is a forgotten subject. We comment on some of the fund’s holdings below.

Volvo issued a really strong report across the board, leading to a well-deserved gain for the stock. Holmen’s was weaker on both revenue and earnings, explained mainly by a production stoppage at Iggesund. Its debt continues to fall and the dividend was upped. The drop in share price following the report feels exaggerated.

Skanska had issued a profit warning prior to its report and therefore managed to exceed low expectations. The earlier weak share price performance means its dividend yield is now around 5 percent. Telia was an upside surprise and raised its dividend more than anticipated, causing the share price to improve.

The fund bought shares in Investor this month, which were financed by selling stock in Industrivärden. Investor’s discount is more than twice as high, but Industrivärden remains an important holding. The fund fortunately bought Volvo ahead of the report, but has reduced its stake in SCA.

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Since 2nd November 2017 Carnegie Strategy Fund is a feeder of Carnegie Strategifond, the master. The fund management is therefore identical. For more specific information regarding the master fund’s holdings, please visit...

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