The coldest July in a long time for staycationers was somewhat warmed by the strong Stockholm exchange. The global recovery continues, with improving numbers from Swedish engineering companies, which announced smaller sales drops than expected, surprising margins and better cash flows. State aid has partly helped, but it was huge savings and speed that saved many of the results. Perhaps most impressive was that Volvo Trucks showed a profit despite a huge drop in sales. But other engineering companies in the portfolio – Atlas Copco, Epiroc, Sandvik, SKF and others – were impressive.
Engineering shares have lost momentum recently, which may be due to a strengthening of the Swedish krona. Might there be a small impact from the Swedish coronavirus figures going in the right direction?
The stock market is in a fairly strong period, according to the classic pattern of two steps forward, one step back. Stimulus, infection stats, vaccine news, China/US all make it rise and fall. Although many countries are now going in the wrong direction with their figures and the recovery may slow somewhat in the third quarter, we are on track and most investors continue to look beyond 2020.
The rise in the US stock market is being driven by a few stocks, and the majority aside from the tech giants are actually down (!). To some extent this also applies here. Many of the winners are in tobacco and gambling (casinos), which we are unable and unwilling to invest in.
We note that most holdings in the portfolio are doing well. Stable holdings like Essity and Holmen may not have moved much in terms of price, but their businesses are doing well. And talking of Holmen, record sales of forest were reported at twice Holmen’s valuation.
We increased our holdings in ABB and Kinnevik. Most things will improve for ABB, and a cushion in the form of a giant repurchase limits the downside. Kinnevik is upping the pace of its business, and hidden values are being revealed daily. It is still traded at a discount while several other investment companies have premiums.
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Carnegie Sverigefond investerar i svenska börsnoterade aktier och innehåller landets bästa och mest stabila bolag. Vi investerar långsiktigt i värdebolag – bolag med hållbara verksamheter, starka balansräkningar och goda utdelningsmöjligheter. Carnegie Sverigefond...More info