Little Duni continues to deliver stable numbers
Risk. Or, in financial jargon, “risk on” was the nature of the stock market in April 2018, particularly in Sweden as the economy pushed ahead and hundreds of companies presented their quarterly reports, says Carnegie Sverigefond’s fund manager Simon Blecher in a monthly report.
The Stockholm stock exchange rose considerably, by more than 4 percent. Small caps rose even more. Large movements on reports and diverse recommendations from analysts had a big impact on share prices, and most high-risk instruments made good returns. We saw violent upswings for lots of biotech companies, and engineering companies with high valuations continued upward (Alfa Laval and Assa Abloy) while those with low valuations were met with a shrug (SKF), and there were big movements in many of the gambling companies, tech companies and, of course, commodities companies.
Consequently, nobody cared when little Duni reported stable figures for another quarter. But we met with the new CEO, Johan Sundelin. He seems enthusiastic and we hope he can use Duni’s strong balance sheet for a few acquisitions in Europe and Asia. We also had a good discussion about the importance of sustainability, and Duni is working hard on continuing to reduce emissions and reuse its products as much as possible. Meanwhile, we get a share with earnings that are valued lower than the stock market and with dividends that are higher.
Pleasingly, Telia reported good numbers and, if we assume that in coming years shareholders will receive just over SEK 3 per share in the form of dividends and buybacks and that the reckless deals are at an end, a price of SEK 60 would mean 5 percent in annual distributions, which is not bad for a truly stable company.
We increased our holding in Industrivärden C when the discount suddenly moved from 6–7 percent to almost 15 percent. Do not forget that the dividends are paid without discount, and as these are passed directly from the holdings there will, all else being equal, be a higher dividend through Industrivärden. And we like the portfolio, which after the sale of half the stake in SSAB contains even less risk.