It was a reasonable month for Swedish equity investors, with rising prices and some recovery of January’s decline. The acute concern that the US is heading into recession has subsided, while the decline of commodities seems to have waned. Simon Blecher, who manages the Carnegie Sverigefond fund, is pleased with the past month.
Public companies showed their colours with acceptable financial statements, given the widespread concern that their reports would be really weak. The conclusion, unfortunately, is that the first quarter is unlikely to be great, but at least the economy has not significantly weakened, and slow growth and low inflation will persist globally. In a local Swedish perspective, however, the numbers are increasingly strengthening. Despite this, the Riksbank cut interest rates so things are likely to boil over in a year or so.
The majority of our holdings upped their dividends and, if nothing else, this suggests we are consistent in our strategy of choosing unexciting and stable companies, and being paid for it.
On the subject of our investment philosophy, we should point out that there were big market price movements in both directions. We owned no Meda stock, which skyrocketed on the bid from US Mylan, but we have always avoided pharma companies with high debt and that are difficult to analyse. Similarly, we have avoided Elekta, which recently crashed. As we have said many times before, we miss out on plenty of skyrockets but we avoid the landmines. We invest rather than speculate.
We chose to make two major purchases this month, namely Atlas Copco B and Investor. Atlas has fallen to attractive levels on a weak report and, given its extremely strong balance sheet, we would not be surprised to see it making a major acquisition soon. Investor’s discount has suddenly risen sharply again and, using our calculations, is back at nearly 30 percent, which attracted us to buy. The purchase was financed with small sales of Nordea and Swedbank.