Stillfront defies the merciless market
Carnegie Småbolagsfond fell 20.8 percent in March. Stillfront, the fund’s largest holding, did well against the stock market crash and rose 5.1 percent.
We do not yet know how the company fared in March, but streaming services for computer games have reported record numbers. There is plenty to suggest the sector did very well in March. Such a significant relative return naturally calls for reflection, but the valuation multiples still look attractive and we believe the company’s development has been, and will continue to be, good despite what is happening in our world.
Dometic’s share price fell 45.8 percent; a dramatic development. The company is, of course, impacted by the coronavirus pandemic, but we believe it is wrong to evaluate it based entirely on the current situation.
Motorhome manufacturers, Dometic’s customers, are probably reducing their purchases radically now that the world has stopped, but it is worth remembering that a large part of Dometic’s sales go to the service market, which should do quite well. Looking ahead, motorhomes and caravans ought to have a future. Perhaps people will look more to staycations, which makes Dometic’s products perfect. We have increased our holding.
We have increased our holding in Loomis. The share has performed poorly, and the company is now valued well below historical multiples. The ongoing shutdown is clearly bad for Loomis since closed stores have no need for its cash handling, but much of its business is directed at banks and ATMs. If we then add grocery stores, pharmacies and retailers that are still open, much of the company’s sales are intact.
Loomis has a fairly flexible cost structure, and personnel costs are a large expense item in the income statement. It should be possible to postpone investments if necessary. The current events are naturally bad for the company in the near term, but it may be able to exit the crisis with improved market shares.