Increasing in Atrium Ljungberg after stock slide
While the coronavirus mainly remained in China, the securities markets were calm. But once it became established in northern Italy the impact was all the greater. Equity markets fell broadly without precision, interest rates are down and credit spreads widened somewhat.
The spread to Europe means Nordic industry will certainly be impacted short-term. Some consumption and production will be lost forever, but some will be just postponed. This, together with expected monetary and fiscal stimulus, would support a relatively quick and strong recovery once the situation stabilises, so the fund has not made any major tactical reallocation in terms of the risk level. The equity weighting is just under 60 percent.
The fund made some portfolio changes in February. We upped our holding in Atrium Ljungberg as the stock fell steeply on the year-end report. Interim reports from companies of an asset management nature (like real estate, forest and power) should not experience much reaction either way since revenues and costs are relatively predictable. The influence comes mainly from changes in the required return.
Lifco’s report fell a little short of expectations, but the reaction should be set in the context of the share’s strong performance in the month ahead of publication. As the fund had reduced its holding somewhat before the report, we bought the stock again after the negative share price reaction.
The holding in Industrivärden was sold on a good gain and reduced discount, partly to finance purchases of the stocks above. Since the fund invested in Sampo at the end of 2018, the return has been good but not on par with index. However, its performance has exceeded Swedish banks with a visibly more stable return. That said, there are more attractive options at the current valuation.
On the bond side, we invested in Akelius, which raised new capital through a hybrid bond, a new name in the form of real estate company Niam, and increased the holding in Heimstaden. We also marginally reduced our holding in Hurtigruten after good performance following the issue.