Saturday, December 23, 2017

Own positions compared to those of famous money managers

In continuation to my previous post I wanted to see how our positions in stocks listed in U.S. compare to those of 64 money managers followed by

Ownership count among the 'superinvestors':

Berkshire Hathaway Inc. (BRK-B): 16
General Electric Company (GE): 11
Intel Corporation (INTC): 3
Micron Technology, Inc. (MU): 3
Nokia Corporation (NOK): 2
Western Digital Corporation (WDC): 3

It's somewhat surprising how small the ownsership count is in the tech stocks I have selected. Especially in U.S. based companies like Intel, which are leading companies in their industries and trading at very reasonable valuations.

I also wanted to see which money managers have selected same plays.
Robert Torray is holding currently 3 out our 6 stocks: BRK.B, GE, INTC.

There are quite many which have 2 out of 6 common (five money managers). From those I raise the names that have selected min. 2 out of our 4 tech stocks, because those are the most interesting to me.

Robert Olstein of Olstein Capital Management has position in both INTC and WDC.
Meridian Contrarian Fund is long in NOK and MU.
David Tepper of Appaloosa Management holds both MU and WDC.

I think I just found more money managers to follow besides the two I mentioned in my previous post ..

Thursday, December 21, 2017

The only stock both Warren Buffett and David Einhorn have in their top 10 holdings

I follow many money managers. Two of my favourites to watch are Warren Buffett of Berkshire Hathaway and David Einhorn of Greenligh Capital.

After comparing their top 10 holdings side by side, I noticed they have only one stock in common: Apple (AAPL).

Their history on Apple ownership is, however, very much different. Einhorn initiated position in Apple as early as in Q2 2010* where as Buffett's position in Apple was disclosed in Q1 2016*.

Einhorn has reduced his position in recent quarters. Apple used to be his top position still in Q4 2016*. Now it's 5th largest*. In Berkshire's portfolio Apple is currently* 3rd largest investment.

Despite following both closely, I don't share any of their top 10 holdings currently. I admit I have considered Apple multiple times and regret for not hopping on board then.

(*) Reference for positions and their history:

Sunday, December 3, 2017

Semiconductor sector: quite a ride

Semiconductor stocks have had quite a ride in year 2017. Like a lot of technology stocks out there, also some semiconductor companies start to look expensive. However, not all of the chip stocks have challenging valuations.

Intel core i7-970 pin side
Image: Rainer Knäpper, Free Art License

I collected a bunch of well-known large cap chip stocks to the following table and sorted them by forward price per earnings ratio from lowest to highest:

Table. Comparison of selected semiconductor stocks (data source:

It has to be said that this is by no means an apple-to-apple comparison as these companies - while all having to do with semiconductors - are very different from each other. There are manufacturers of memory, central processing units (CPU), graphical processing units (GPU), digital signal procesing units (DSP), field programmable gate arrays (FPGA) etc.

Nvidia seems to be the hottest stock out of the selected ones with forward P/E exceeding 40. Market seems to expect great future for this GPU maker. I guess it has to do with new applications for GPUs like artificial intelligence (AI).

Micron on the other hand has the lowest valuations almost across the board. Only Western Digital has lower price to free cash flow (P/FCF). Memory business has been in the past quite volatile (swinging between oversupply/undersupply) so I guess that may be the reason for the market to take cautios view on e.g. Micron.

Qualcomm seems to have largest pile of cash relative to market gap (P/C), but free cash flow does not look so good. Taiwan Semiconductor Manufacturing Company and NXP Semiconductors N.V have good looking free cash flow (P/FCF). With regards to price per book (P/B) there seems to be many in range of 2-3 while Nvidia is flying far higher than anyone else at 18,77.

Our positions in this sector happen to be the top three companies in the list (lowest forward P/E): Micron, Western Digital and Intel. These companies make the basic building blocks of digital age. While they aren't remotely as hyped as Nvidia is, I believe they too are going to do well as the amount of data that each person generates and consumes is going to grow exponentially.

My first two computers didn't have a hard disk drive. I recall third had something like 30MB. Now "low end" of normal drives hovers around 1TB. That's 25000 times the amount I had in early 90's and likely costs a fraction of what I paid for my first drive back then even if adjusted for inflation. With work memory (RAM) the story is similar.

It does not stop here. Big data applications ("data lakes") in corporate world are already dealing with next level multiples (PB = 1000xTB and EB = 1000xPB). Eventually also individual consumers deal with petabytes (PB) worth of data.

Think VR. I don't think it really takes off until VR gear resolution is on human eye level. What we now know as TV may eventually change to a 360 field-of-view VR gear kind device allowing you to look freely around. That means huge amounts of graphics data to be stored and processed.

AI also needs massive datasets at the time when it's "taught" ("machine learning", "deep learning"). Use of AI is also going to enable analysis of vast amounts of data (think massive realtime automated video surveillance of major cities).

I often think of gold rush and how we may now be in same kind of situation with many technologies (like AI and VR). I do not really think about the people who went out to try to find gold, but the ones who figured out what to sell to those people.

Thursday, November 2, 2017

New turnaround bet: General Electric Company

It seems the only original component of  Dow Jones Industrial Average still trading today - General Electric Company (NYSE: GE) - is in trouble or atleast has fallen out of favor.

General Electric stock price chart taken during trading day on 2nd Nov 2017.
Chart courtesy of

It qualifies for a good turnaround bet for patient long term investor as the underlying business is in my opinion solid and extremely well diversified over several industries.

Originally I came up with this investment thesis after scanning well known large US companies in which insiders have been net buyers this year.

GE is a multinational conglomerate involved in multiple different industries. There has recently been change in top management and a lot is expected from new CEO. He is expected to lay out plan for "new GE" on November 13th in GE investor update event [link to related article].

One thing many commentators seem to be expecting is that GE will cut dividends. I buy their arguments and reasoning. It makes sense that the new CEO cleans all possible "tables" now. The company itself have announced already that it will divest more than $20B worth of assets in the next two years, which typically unlocks hidden value.

I initiated buying on the 8th consecutive loss day (today could end up being 9th). The plan is not to try to figure out where the bottom will be, but to continue purchases along the way (down or up) in near future.

Monday, October 30, 2017

Exit from Fred Olsen Energy

Today I decided to finalize our exit from Fred Olsen Energy (Oslo OSE: FOE), which has been in the portfolio since around 2010. This was last pure oil  & gas related stock in our portfolio.

Over the years the position was trimmed up- and downwards. It's safe to say without indepth calculations that the net effect of all trades and dividends has been negative to our portfolio.

The recent gains in the stock do not make any more sense to me than the previos spikes in the stock price during last few years. That is why I thought now is good time to exit.

The year 2017 started with 34,20 NOK price and the lowest valuation has been 8 NOK per share. Today the stock made 3 month high and climbed above 23 NOK. In contrast just 1,5 months ago it was trading under 10 NOK.

The fact is that the fleet will soon sit completely idle as Bideford Dolphin contract ends in early November 2017. The company reports that Bolette Dolphin is "hot stacked" and "contract opportunities are pursued aggressively". Rest of the units are "smart stacked" (3 units) or "preserved and maintained" (2 units).

The company had 688,9 million USD worth of non-current interest bearing debt and 190,9 million current interest bearing debt in end of Q3 2017. Cash and cash equivalents stood at 451,9 million USD.

I do hope they get new contracts soon despite exiting the stock!
They will need the cash flow to service the debt.

Sunday, September 10, 2017

Bull runs and crashes since 1999

Troughout the year I have been checking our performance against main indexes in U.S. and Europe. I have thought that we will do badly this year against our benchmark (MSCI All world country index or 'ACWI') until I actually checked out ACWI net performance this year in euros. Currently it's only slightly above year end 2016 level. Given continued bull run of broad U.S and European indexes in 2017, this seemed strange at first.

Then I checked dollar vs. euro and that partially explains what I am seeing.

USD to Euro in 2017 to date with 100 day moving average.
Chart courtesy of

Since I am measuring ACWI in euros decline of dollar against euro smoothes out bull run of dollar denominated investments.

Our market and currency exposure is heavily tilted to European markets and euro compared to ACWI being exposed much more heavily to U.S market and dollar. That's why falling dollar is tail wind for us.

If we look at the entire history of Euro (since its birth on 1.1.1999), we can see that euro had bull run from 2002 to 2008 which pushed dollar far from parity. Since 1.1.2009 dollar has climbed back towards parity, but not reaching it.

USD to Euro from 1.1.1999 to date with 100 week moving average.
Chart courtesy of

The bull run of both Nasdaq and Dow Jones indexes have been phenomenal from 2009 onwards. The crashes of 2000 and 2008 are clearly visible in the Nasdaq chart. Since 2000 was tech bubble it obviously does not show up in the DJ chart.

Nasdaq Composite index from 1.1.1999 to date with 100 week moving average.
Chart courtesy of

Dow Jones Industrial Average index from 1.1.1999 to date with 100 week moving average.
Chart courtesy of

Compare above two U.S indexes with Euro STOXX 600 index:

Euro Stoxx 600 index from 1.1.1999 to date with 100 week moving average.
Chart courtesy of

Quite a difference. It would be easy to jump into conclusion that European markets are still moderately priced in comparison to U.S markets that are far above their 2008 level. I am not going to do that just by looking at these charts.

Also, since our investments are either to individual companies or specific market segment ETFs the market as a whole isn't really meaningful yardstick. Outside of emerging markets, we do not invest via broad all-market-index tracking ETFs or other such instruments.

I am sure there are individual companies - especially within Nasdaq - that are priced sky high.

However, Looking at companies within our U.S portfolio (Micron, Intel, ..), I do not see alarming P/E or P/B levels when looking both at current and forward levels combined. Berkshire Hathaway is our highest priced investment in U.S. in terms of P/E and that's around 20, which is still fair valuation to that company in my opinion.

[ was used to check P/E and P/B levels]

Monday, July 31, 2017

On success as an investor

According to Peter Lynch (the legendary fund manager of Fidelity Magellan) the qualities related to success as an investor are:
  • patience
  • self-reliance
  • common sense
  • a tolerance for pain
  • open-mindedness
  • detachment
  • persistence
  • humility
  • flexibility
  • willingness to do independent research
  • willingness to admit mistakes
  • ability to ignore general panic

Out of the above list I think willingness to admit mistakes is the hardest. Acting on a mistake is actually even harder as this typically involves selling a stock at significant loss.

Over the 20+ years of investing I have gradually got better at avoiding mistakes. It is extremely rare to find a bargain selling at open market. Low P/E and P/B are typically there for a reason (look for them!). Same with very high yeild.

Out of the all "great ideas" I have had over the years very few have been actually great. I think roughly equal amount (if not more) have been in the exact opposite category. So I tend to be sceptical with regards to any "great idea" that I come up with.

Mistakes do happen when inveting directly into individual stocks as opposed to picking a safe ETF tracking sensible idex.

That's why adequate diversification is paramount.

Tuesday, June 27, 2017

Allocation update mid 2017

Time for mid-year portfolio update.

Currently our portfolio is allocated as follows:

  Stocks 98,5%
  Gold 1,4%
  Cash 0,1%

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

Geographical Allocation (stocks):

  Europe 63,3%
  North America 26,6%
  Emerging markets 10,1%

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

Sector Allocation (stocks) - in order of weight in portfolio:

  Technology – Other
  Technology – Semiconductor
  Clean Energy
  Basic Materials & related services
  Broad Emerging Market ETFs
  Industrial Goods

Top 5 positions - in order of weight in portfolio:

  Siili Solutions (Finland)
  Nokia (Finland)
  Fortum (Finland)
  UPM (Finland)
  Berkshire Hathaway (USA)

18,8% of all stock positions are done via ETFs.
None of those positions made it to top 5 though.

Sunday, April 30, 2017

Which stocks famous money managers hold?

Dataroma tracks famous value oriented money managers that they call "superinvestors". Among them are legendary investors like Warren Buffett.

I regularly take a look what they hold, what they have bought and what let go.

Here is "Top 20" by ownership count compared to situation I had on file from September 2016 (please click to enlarge):

I included all stocks that had up to 10 owners among the famous investors tracked by Dataroma.
The notable changes since September 2016:

  • Apple ownership increased significantly (+5)
  • Wells Fargo made to pole position by continuing to rise in the list (again +3 since last time I checked)
  • Allergan, Comcast and Amazon made it to the list (I have not tracked these before)
  • JPMorgan made again to the list (have been in top 20 before)
  • United Health Group, Liberty Global and Wal-Mart Stores dropped from the list (less than 10 owners this time)

Sunday, March 19, 2017

Helsinki Top 10 Over Billion Euro Companies

There are currently 32 companies listed in NASDAQ OMX Helsinki that exceed market cap of 1 billion euros. I ran my personalized screen to get top 10 list out of those companies.

I use a service provided by via Pörssisäätiö to screen stocks listed in NASDAQ OMX Helsinki. I was not able to rank the following companies due to missing data: Nordea, Sampo, SSAB, Amer Sports and DNA.

Top 10
  1. Citycon - score 2,2 - market cap 2,0 billion euros
  2. Sponda - score 2,2 - market cap 1,4 billion euros
  3. Orion - score 1,9 - market cap 7,3 billion euros
  4. Telia - score 1,8 - market cap 16,8 billion euros
  5. Nokian Renkaat -  score 1,8 - market cap 5,3 billion euros
  6. Sanoma -  score 1,8 - market cap 1,3 billion euros
  7. Elisa -  score 1,7 - market cap 5,6 billion euros
  8. Kone -  score 1,4 - market cap 21,2 billion euros
  9. Fortum  -  score 1,4 - market cap 12,8 billion euros
  10. Neste  -  score 1,4 - market cap 8,9 billion euros
Average Score of all 122 companies in the research database: 1,3
Median Score 1,3

Parameters used in screen (weight):
 P/B estimate current year (13%)
 P/E estimate current year; next year (8%; 10%)
 Dividend yield estimate current year; next year (8%, 8%)
 ROA estimate current year (10%)
 ROI estimated 3 year average ending current year (8%)
 ROE estimated 3 year average ending next year (8%)
 Turnover estimated increase in 3 years ending next year (8%)
 Net Profit estimated increase in 3 years ending next year (8%)
 Gross Margin estimate current year (8%)
 Profit Margin estimate current year (8%)

The used parameters emphasize attractive valuation (31%), profitability in broad sense (26% weight), growth (16%) and dividend yield (16%).

The screen relies on estimates about future. Those combined with volatility of stock prices means that you should not try to chase screens like these (I don't). Ultimately any investment decision should be based on much more than just looking at the current numbers and estimates of future numbers.

Disclosure: Author is shareholder in Citycon and Fortum.

Wednesday, February 8, 2017

Exit from "big oil"

I decided to exit from Chevron and Statoil.

I felt Chevron was ripe to be sold and Statoil was tossed out in the same decision making process.

This means that the only direct stake left in oil & gas industry is Fred Olsen Energy - a position, which has been also trimmed downwards.

Overall these moves mean it will be just matter of time that we exit from the whole sector.

Proceeds have been diverted mostly to small-to-medium publicly-listed companies in Finland in multiple sectors.

Wednesday, January 25, 2017

Blog update

This blog has recently reached 100,000 pageviews. Thanks for all readers!

Few changes in the blog:

I have decided to remove the list of all positions that used to appear beside the blog entries. The main reason for doing this is that I do not want to disclose positions in individual small Finnish companies.

Some of the small cap companies trade in extremely small average daily volumes so accumulating (or getting rid of) positions that are significant compared to the daily volume will take a while. Also, there is a possibility for fairly easy identification in case we would hold positions in multiple small cap companies (which may have less than thousand shareholders).

Finnish book entry law & system is such that all positions in publicly-traded shares by Finnish citizens are public. Only book-entry shares owned by foreign (non-Finnish) shareholders may be nominee registered.

To stay in alignement with policy required from Seeking Alpha contributors (and Seeking Alpha -certified blog), I continue to disclose any positions we have related to an article / post that will be published given the post is specifically about a company/ETF that we hold.

Friday, January 6, 2017

Allocations for 2017

At the start of the year 2017 our portfolio was allocated as follows:

Stocks 98,1%
Gold 1,6%
Cash 0,3%

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

Geographical Allocation (stocks):

Europe 53,3%
North America 35,6%
Emerging markets 11,0%

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

Sector Allocation (stocks) - in order of weight in portfolio:

Information Technology (significantly overweight compared to even split across all chosen sectors)

Oil & Gas Production
Low Emission Power Generation
Forest Industry
Health Care
Metal Industry
Mining & Exploration (significantly underweight compared to even split across all chosen sectors)

Top 5 positions - in order of weight in portfolio:

Siili Solutions (Finland)
Berkshire Hathaway (USA)
Fortum (Finland)
UPM (Finland)
Nokia (Finland)

21,0% of all stock positions are done via ETFs.
None of those positions made it to top 5 though.

Sunday, January 1, 2017

Portfolio performance 2009-2016

Let's review how our portfolio fared in the year 2016 against passive index investing.

Our "benchmark investment" is an imaginary passive ETF that closely tracks the performance of MSCI all country world (ACWI) index in euros.

First half of 2016 was absolute horror show (vs. index and in absolute terms even more so) and we were behind index most of the year - until December came along and several of our positions gained manyfold compared to index so we ended up beating our benchmark in the past year.

The result for the year 2016 was our portfolio 14,9% vs. benchmark investment 10%.

Note: "Difference" column uses exact values as input rather than figures rounded to 1 decimal that are displayed.

The "beat" is mostly due to our positions in U.S that fared very well.

Euro continued it's decline agains USD from 1,086 to 1,054, which created small headwind for us as our portfolio is significantly more titled to Europe than the ACWI index.

Cumulative gains of our portfolio (blue line) vs. benchmark investment (red line). 31.12.2008 = 100.

It's continues to be amazing how closely we overall track the benchmark given that our portfolio has very different region & sector allocations compared to ACWI index.

While I would naturally like to beat the benchmark we have set for ourselves, the performance so far isn't that bad given that over 70% of the actively managed investments funds fail keep up long term (10 years) with their benchmark index (according to Morningstar - as I wrote last year for 2015 review).

To be fair, I don't track our performance purely against the index (below), so we are trailing cumulatively the pure index to some degree. If you want to know more about our "bechmark investment" against we track and the way above comparisons are calculated, please read the latter part of portfolio performance update from 2014.

 Our benchmark index 2009-2016 (based on data from MSCI All Country World Index; Net; Euros)