Recent debt restructuring has left the portfolio D/E ratio way above the limit defined in my strategy. I’m aiming at 0.1 ratio during normal market conditions and calling current market normal is a stretch as well. At the moment the ratio sits at 0.154 and as we are more likely to be at or near peak of the market, ratio should really be more in the neighbourhood of 0.05 0r less. Then again central banks are making it very difficult to define market normal or abnormal. This may very well be the new normal for years to come.
After some consideration I’ve decided to move into a conditional maintenance mode. By this I mean a mode in which majority of the new capital is used to pay down portfolio debt. Conditional in that sense that should there be significant corrections in value for some of my holdings and/or companies in my watch list, I will execute planned purchases regardless the portfolio debt level. Short term execution should be quite easy as my broker still has the small purchase order campaign active which allows me to make small maintenance purchases in a cost effective way. One unknown factor is Nordea Bank AB. If they decide to move their HQ to Denmark, I might have to eventually sell my position due to taxes. In such case timing would be a bit tricky and I most likely would invest at least some of the money in Sampo in order to increase my indirect Nordea position. Some of the money could be used to pay down debt and speed up the planned debt rebalancing. There are many alternative plays here and some analysis and planning is required before proceeding with any of them.
For new positions I have some in my radar. I’ve been thinking about hydrogen sector for some months now and might initiate a position in NEL Hydrogen if the stock revisits sub 2 NOK levels. It’s a risky play and in a sense not suited for this portfolio as it doesn’t pay a dividend at the moment. Then again it could be considered as ultimate dividend growth stock if and when it starts to pay one. The sector has a lot to like. Public discussion is way too focused on standard electric cars when the actual beef is in larger scale mid-storage solutions, ships and busses and so worth. Family cars and fuel cell applications would be interesting possibility as well since the refuelling process would be similar with the current one, transportation and storage would be closer to the current method which should appeal to current big players such as NEL partner Shell. Easier taxation would be interesting factor as well as it might lead to not so market driven subsidies. There’s a lot to like in the sector even though it’s very speculative.