Monday, September 28, 2015

Changes to portfolio

Crazy times in market...

That can be viewed also as an opportunity to make changes.
- And change we did.

I have made a few changes recently to our portfolio that are significant enough to be mentioned:

  • Cisco Systems (USA)
  • Microsoft (USA)
New positions:
  • Volkswagen (Germany)
  • Market Vectors Oil Services ETF (NYSE: OIH)
  • Vanguard Health Care ETF (NYSE: VHT)
Added to following positions:
  • Chevron (USA)
  • Statoil (Norway)
  • iShares MSCI Global Select Metals & Mining Producers (NYSE: PICK)

Which one stands out?

That's right... Volkswagen. Well, that's purely opportunistic position in a stock that I have once considered, but didn't buy at the time. I don't think we would be in there without the huge 40% drop following the emission scandal. Only time will tell how good or bad time this was to enter.

Otherwise this change is about shifting money from IT to other focus segments of ours: Oil & Gas, Health Care and Mining sectors.

Sunday, September 6, 2015

Two positions above 10% of portfolio

Due to recent wild swings in the market and our portfolio allocation changes, we have now two companies that have above 10% share in portfolio.

These are Fortum (Finland) and Siili Solutions (Finland).
My most recent posts about these companies here (Fortum) and here (Siili Solutions).

Overall, this year has potential to turn out as our worst year vs. benchmark, but we have still roughtly 4 months to go, so let's see.

Friday, July 24, 2015

Increased stakes in Fortum

I have more than doubled our position in Fortum lately because I think it is now very attractively valued.

My seven reasons for holding Fortum have not changed much in two years.

The reason #7 has now realized and hidden value has been unlocked. Fortum now has liquid funds worth 8,6 billion EUR after the divertments of Finnish and Swedish power distribution businesses.

At 15,50 EUR per share it has market cap of only 13,8 billion EUR.

According to fund manager Anders Oldenburg, the hydroelectric power plants that Fortum have are alone worth 15–17 billion EUR. 

Add that and the liquid funds together and you start to see the picture.

Market seems to value the company very much differently. There are short term headwinds with low price of electricity and market likely is hypersensitive with the business in Russia.

While it's entirely possible that the stock will continue to go south, one gets paid reasonably well for waiting for "better days". The "usual" dividend from Fortum has been 1,1 EUR (7,1% yield @15,50 EUR). On average analysts seem to expect 1,26 EUR next time.

Saturday, July 18, 2015

Sold Orion

Even though I like Orion as a company, the price climbed recently too high to make sense to me.
There are other companies in Finland of same quality, with higher dividend yield, better future prospects and more reasonable valuation.

It seems that many companies in pharmaceutical sector are valued high (P/E > 25) - just like Orion was when I sold it. It seems bit challenging given the headwinds most companies need to face with blockbuster drugs going out of patent protection.

Thursday, July 2, 2015

Portfolio update: Allocations and Top 5 positions

It has bee quite a ride in the markets past 6 months. First 4 months most of our stocks were performing really nicely. In the last two months aggregate gains have been almost wiped out.

Our portfolio is currently allocated as follows:

Stocks 98,0%
Gold 1,9%
Cash 0,1%

No bonds.
I simply substitute bonds with quality dividend payers in our portfolio.

Geographical Allocation (stocks):

Europe 54,5%
North America 33,6%
Emerging markets 11,9%

Actually, place of incorporation is pretty meaningless for most corporations we have invested in. Most operate and sell globally.

Sector Allocation (stocks):

Information Technology 44,6%
Other 21,8%
Health Care 8,8%
Oil & Gas Production 8,4%
Communication Service Providers 6,6%
Low Emission Power Generation 5,8%
Mining & Exploration 4,0%

Top 5 positions:

Company/ETF (place of incorporation -- sector) allocation%

Siili Solutions (Finland -- IT) 9,2%
Western Digital (USA -- IT) 6,8%
UPM (Finland -- Other) 6,4%
Micron (USA -- IT) 6,1%
Nokia (Finland -- IT) 5,9%

21,1% of all stock positions are done via ETFs.
None of those positions made it to top 5 though.