Upping stake in ever-misunderstood Skanska
The economy is starting to flag. German numbers have been bad for months and continue to worsen, Swedish numbers are following, and towards the end of the month US statistics also showed that we are heading for worse times.
But, is anyone really surprised? Haven’t we been watching and waiting for these signals for over two years? Isn’t this why cyclical shares, particularly SKF and Volvo, are lower than two years ago despite clear profit increases?
We guess the market has seen through this and it is perhaps why there was a violent rotation in early September, when banks/engineering rose and real estate alongside somewhat more stable/defensive companies fell. Towards the end of the period, as data got worse, everything was reversed. The month ended positively and our basic hypothesis is that this may symbolise the market in the coming months – well aware that October began in turmoil, as is its habit – such that the economy deteriorates while stock market prices hold up.
We would not be surprised if profits turn downward in the coming years, but share prices rise. And most cyclical companies could tolerate 20-30 percent profit falls without appearing expensive in relation to historical valuations.
One of the month’s better shares was the ever-misunderstood Skanska. Despite a higher share price, it is now valued at “only” SEK 80 billion, which corresponds to the properties, the market, cash reserves, infrastructure projects and Skanska Residential. This makes the construction business free! In the coming months, we expect Skanska to sell Solna United and a huge building in Seattle, together amounting to ten percent of market capitalisation. We upped our stake this month and Skanska is again one of our largest holdings.
We continue to buy shares in Electrolux as the company’s Professional Products spin-off approaches. Ditto Securitas. It is a little difficult to understand why stable and defensive Securitas is valued below the stock market and at the same dividend, even though its stability should be rewarded, especially as people start to worry about the economy.
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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