Not much to say. Everything is down. Occasionally some go up. So much winning. Bought additional 40 shares of Sampo for 28,40 EUR per share. It might go down or up if it doesn’t stay still. It will be trading ex div relatively soon and they have cut this dividend only twice so far. Hopefully they will forget third cut. Long term everything should be fine… maybe.
EPR Properties has been hit hard but it has already bounced back quite a bit. I’m putting my money on EPR surviving this COVID-19 panic. Sure, it will take time. Sure, they might have to reduce or even eliminate dividend. Sure, people might permanently stop golfing or skiing. I’m guessing that they won’t. In fact I’m quite sure that once the dust settles, there will be huge demand for that kind activities. Therefore I bought additional 30 shares for 29,90 USD per share. Let’s call this a speculative purchase.
There has been relatively many positive factors for Fortum lately. Uniper posted solid results, Fortum is getting positive publicity – well some negative as well for the coal usage – and Inderes increased target price today to 17 EUR per share. Share price hasn’t really noticed any of these so I bought additional 67 shares for 14.96 EUR per share. Considering the future potential, company metrics and overall state of the economy this appears to be very acceptable valuation.
Maintenance purchase since Fortum was trading ex dividend today. Bought additional 13 shares for 14,825 EUR per share. Uniper posted great quarterly results yesterday but that wasn’t too clearly visible on Fortum share price at least today. Could have bought more but I’m still keeping an eye on things and pacing myself.
Corona is hitting everything and REITs especially. Sure, temporary suspension of dividends is likely but that’s somewhat irrelevant short term noise. Private prison REITs appear to be very cheap as they were first hit by the political risks due to the presidential elections and then with the corona disaster which may very well spread in prisons in uncontrollable manner. This is unfortunate of course but for the long term not much has been changed. I doubt US government will scale down the usage of private prisons who ever may be sitting in white house in any given year. Considering the current economic situation and US way of living, it’s difficult to see any path in which there would be meaningful decrease in crime and punishments that follow. In worst case scenario these REITs could sell their portfolio to the government and I would be perfectly fine with that as well. With this in mind I bought additional 80 shares of GEO Group for 11.57 USD per share.
First quarter of the year is over and what a ride it was. First the markets were hitting all time hight valuations and then corona virus hit the global stock markets like a black swan on steroids. In retrospect quick adaptation by selling everything would have been the sensible choice but that doesn’t really fit into the DGI influenced strategy. Real impact on dividends will remain to be seen. Short term there will be a significant hit but there are also long term possibilities. Some of the strong companies should probably eliminate the whole dividend and invest the money wisely. Prime candidate for this would be Sampo Plc which could increase the stake on TopDanmark. For the main portfolio this quarter was quite bad with -37% drop in value. Impact on dividends is not visible on metrics until next quarter. Dividend income during Q1 was 1 302,58 USD and 101,40 EUR before taxes.
Overall this drop was not totally unexpected though it should be noted that exact timing and reason was unexpected to me. In retrospect it should have been quite obvious if one would have paid enough attention on the news coming in from China during January and February. Long term strategy has not been changed. I was always planning on buying at least for one turn of the economic cycle. Therefore I’ve naturally now moved back to normal buying mode. I’m quite well positioned for it unless of course if this economic turn hits my personal finances. Even that should be quite easily digestible event as I’ve prepared for the turn for quite some time now. This was mainly done by reducing the debt load to minimum. It’s quite easy to take this kind of hits without mortgage. This drop also opens the possibility to make some tax efficient moves by e.g. moving certain assets between providers.
Corona keeps on spreading and insanely large stimulus packages are being created. Don’t get me wrong, I absolutely believe that situation requires massive public spending. The problem is that there has been plenty of unsustainable public spending for a decade or so already. This keeps the door open for inflation and interest rate problems in the future though there’s a solid case for deflation as well. This is the reason for my debt re-structuring during the last six months or so as risk mitigation. Running very low debt to equity ratio makes it much more easy to face this kind of turmoil both in stock market and in the underlying economy. So far the impact on portfolio has been easily manageable even thought REIT heavy allocation hit the portfolio hard. Even though the main portfolio carries some debt (which is offset with cash & equivalents elsewhere for liquidity and counter party risk offset purposes), lowest interest rate level was maintained in portfolio during the last drop.
It’s really hard to say where stock will go in short term. I wouldn’t be surprised if we will see a major correction in either way during the next three to six months. Therefore I’ll maintain disciplined approach and buy through this cycle while maintaining the low debt to equity ratio. Eventually all this stimulus money will go somewhere even in Europe. Germany being involved, I believe Uniper (of which Fortum owns a majority share of) will be in good position to either benefit from the stimulus with energy transformation focus or to behave as as more stable and defensive play in extreme bear scenario. Having this in mind, I made small Fortum purchase with 20 shares bought for 13,455 EUR per share.
Panic is spreading even faster than Corona virus. I’ve moved to normal buy mode and therefore bought additional 40 shares of Fortum for 13,265 EUR per share and 40 shares of Sampo for 24,7 EUR per share. Fortum in general is very defensive (relatively at least) and Uniper opens up huge possibilities going forward with the energy transition which is likely to benefit from various stimulus operations in near future. Sampo has dropped very quickly and can be called cheap at the moment. Short term it may very well go further down but current valuation opens up interesting possibilities for purchasing own shares or aggressively buying Topdanmark.
Corona is hitting hard and that’s likely to continue for months. This is also affecting Fortum which is in interesting position with Uniper considering the fact that they are also soon changing CEO soon. That’s a shame as I’m quite a fan of the current CEO Pekka Lundmark. It remains to be seen who will take his position but I’m sure the board will find a proper replacement. Change might even be a good thing with all the turmoil in Uniper during this acquisition. Now that Uniper is also moving on with hydrogen, it has become even more interesting. Being a fan of falling knives I decided to buy 60 shares for 16.65 EUR per share. Smallish starter position but perhaps I manage to buy more in coming months. Current market is finally presenting some decent valuations. I’m especially looking into Aflac, Sampo, 3M and Abbvie. Lodging sector is also one to watch as it has been hit really hard but I suspect that it will not correct itself quite as quickly.
CapMan was trading lower today so decided so sell my tiny position on Hexagon Composites and bought CapMan as replacement. Hexagon position was really small starter position which I hadn’t managed to build up. It was really unlikely that I would be able to build that position in coming months so this move made sense to me given the valuation CapMan had. I bought additional 100 shares for 2.40 EUR per share. Hexagon Composites was very much secondary position and overall I think that I might end up exiting the whole sector during this year or next as I expect eventual buy out for NEL.