As expected, Mandatum Oyj traded below initially expected fair value range. Fair value range is here of course up for debate as times are tough and sector might be challenging during economic slow down. There are also clear technical reasons as all recipients of this spin-off are not willing or even allowed to hold their shares. This might go on for week or even months as at least some funds probably can sell their shares over a longer period and changes in indices will also take time. I had initially defined 3,70 EUR per share as my threshold. Initially it seemed as if I would have missed to boat here but two orders got executed: 500 shares for 3,69 EUR per share and 1000 shares for 3,65 EUR per share. It remains to be seen if some of these will be only short or mid term positions. Total exposure is a bit on the high side for this type of stock but then again there’s some real potential here. Not only because of the technical reasons but the whole sector is ripe for consolidation.
Third quarter is over and this time it involves slightly unique situation: Sampo is spinning off Mandatum and this process is impacting both portfolios. In practice this means that reliable data is not available at the time of writing as portfolio values and performance metrics are temporarily skewed. Main focus however is in tracking dividends – as valuations tend to go up and down – and in that front performance was somewhat in-line with expectations: dividend income during quarter in Euros (pre-tax) was 1702,80 EUR.
Not much has changed since previous quarter. Geopolitical situation is more or less same and interest rates are probably at least close to peaking on both sides of the Atlantic ocean. Neighbouring Sweden has hit the wall with crime and immigration issues, southern Europe is showing similar signs and Finland is likely being pulled into the same mess. Public economic debate has for a while shown signs of distress: housing prices have declined, construction companies are already failing and employment level is likely going down as multiple industries and sectors will be hit. Winter truly is coming. Multiple markets are having fundamental problems in the underlying economy. This includes US (despite being incredibly robust when compared to Europe) and Europe in general. There are multiple elections coming up and truly addressing any of these problems will be incredibly difficult. Russia’s war in Ukraine naturally being one of the most difficult ones. There aren’t many countries I would consider truly viable in economic sense. Perhaps Norway being a rare exception. Having said all that, I’ll probably steadily buy stocks while allowing cash position to slowly increase during Q4. Likely additions will be for Realty Income REIT, Kesko and Fortum positions. If Mandatum will be initially dropping for technical reasons (all recipients not interested or even allowed to hold it), I might make mid sized addition on the position.
REIT sector has been taking a beating and Realty Income has felt it too. Interest rates are naturally key factor in this and overall economic situation is not that great either. Latter applying in both sides of the pond. Overall I see Realty Income as very interesting at current valuation levels. Sure, short term pain is likely to continue but long term it should do just fine. Therefore I re-invested dividends and bought additional 25 shares for 50.21 USD per share. If there are no drastic changes in valuations, I might be aiming for additional three identical tranches in coming months.
Especially Finnish economy is starting to have negative enough sentiment. Construction companies are starting to drop like dead flies and that is likely to trigger domino effect among the smaller companies in the associated value chain. This will be yet another impact on average consumer already hit by inflation and higher interest rates. Kesko has already felt this hit in the share price but otherwise not so much. This is likely to change but on the other hand they are using this opportunity to expand their Nordic presence. Will the share price drop significantly during the next next 6-12 months? It very well might. I still decided to initiate position in company with a modest purchase of 30 shares bought for 17,99 EUR per share. I anticipate this to be relatively slow position building process. Company itself is solid – even high quality one – and management appears to be excellent. Then again next few years are likely very difficult for the Finnish economy. It remains to be seen how Kesko manages to navigate through these turmoils.
Maintenance purchase with additional 50 shares of Nordea Bank bought for 10,03 EUR per share. Banking sector is problematic one and in current interest rate environment peak is probably close. Then again Nordea managed to perform well enough even in zero interest rate environment. Since then they have improved significantly in many fronts and have been active with buybacks. Will real depression wreak havoc in Europe? Possibly. Would it hit Nordea equally hard? Likely. Will it survive with dry enough feet? I’ve put my money on it.
As previously planned, I rounded up my Realty Income REIT position to even number with a purchase of additional 19 shares bought for 62,87 USD per share. REIT sector in general has felt the impact of raising interest rates so in general I consider this as decent time for rotating back towards the sector. Realty Income itself is not exceptional bargain – it rarely is – but valuation appears to be relatively reasonable and something that justifies this maintenance purchase type of transaction.
Small maintenance purchase as planned with 50 shares or Nordea Bank Abp bought for 10,35 EUR per share. Nothing special here as Nordea appears to be very reasonably valued. One could argue that market is trying to tell something with that valuation. Central banks are significant drivers here and overall impact of the their actions can be catastrophic for banking sector as well. That remains to be seen. I might still make few similar maintenance purchases in coming months but might also skip those. On top of those I’ll probably add on Realty Income just to even out the total share count and then focus on pharmaceuticals as I planned before.
Slept over it and decided to go ahead with doubling my Fortum exposure with a purchase of 300 shares bought for 12,06 EUR per share. I still have somewhat mixed feelings about this and usually that spells trouble but let’s see how this goes. This pretty much finalises my summer campaign and I’ll focus on restoring my reserves during the coming months. In practice I’ll probably focus on minor maintenance purchases (likely Nordea Bank) and reinvesting dividends (pharmaceuticals and possibly some REITs).
Slightly unplanned but bought additional 30 shares of Sampo Plc for 38,99 EUR per share. Share price has declined for a while now and slightly negative guidance update from Topdanmark. On top of this there’s the Mandatum spinoff which probably has impact on multiple shareholders not so interested in becoming direct Mandatum shareholders.
Slight change of plans. Instead of slowly adding on both of these with smaller purchases, I bought additional 150 shares of Fortum for 12,18 EUR per share and additional 80 shares of Nordea Bank for 9,8 EUR per share. This was mainly because of holiday season and re-evaluation of the market situation in general. Increasing inflow of fresh capital from reserves appears to be justified right now especially with European equities. My Nordea Bank exposure is already on higher side so that might get just smaller maintenance purchases going forward. For Fortum I had envisioned capping the total exposure at 300 shares where I’m now at with this purchase. I’m considering doubling that to 600 shares but still have somewhat mixed feelings about this.