Investments

Addition to my ever growing Sampo position with a purchase of 30 shares for 43,10 EUR per share. Nothing has really changed lately and the investment thesis is intact. Exceptionally well managed and investor friendly company which always tends to trade with a premium. Rightfully so I might add. This purchase was actually done marginally above my buy range but no point counting pennies at this point. There’s a chance that the management is cooking up something new either with Nordea position they hold or with IF & Topdanmark insurance side. Relatively high Nordea exposure is the only downside so I might have to consider trimming some of it at some point. Don’t see a real point in that with the current valuations though. Nordea trading in the neighbourhood of 13 EUR per share would make it harder to avoid such ideas.

Recently I sold out on Deere Company as I didn’t like the ATH valuation near the bottom of the cycle. I expected to able to buy back the shares but, as these things usually go, ended up selling too soon. At the time I also initiated secondary position related to farming. It’s a bit different kind of play through fertilisers but Yara International fills that spot in the portfolio just fine. Today I decided to add on the position with a purchase of additional 30 shares for 314,50 NOK per share. Their latest report wasn’t something to call spectacular but it was decent enough. Their dividend distribution was a disappointment for some but personally I kind of like how strictly they applied their plan for payout ratio. I have no doubt this company will do just fine in the long term as the cycles turn.

It’s getting really difficult to find decent valuations especially from the US. Current political situation on both sides of the pond is also a challenge. Trump administration and big pharma is a play that I’ve had hard time to justify for myself. Then again I’ve anticipated significant repatriation of assets during the next years for multiple major US corporations. All this together with a very decent report from Pfizer (NYSE:PFE) tipped in favour of initiating a starter position on the company. Today I bought 70 shares for 32,36 USD per share. It remains to be seen if I’ll build a full position on it but this should be keep the company on my radar for the next  months and quarters.

Link: Pfizer press release

Omega Healthcare Investors reported their earnings and dropped around 5%. Reported numbers were fine but guidance was considered weak as it’s supposed to be flat for FY2017. That would be acceptable as well given the current valuation which is still indicating them to be significantly undervalued. I personally consider the guidance as the worst case scenario and decided to buy additional 35 shares for 30,97 USD per share. There are some real risks involved but long term case is still very much there for me.

http://seekingalpha.com/news/3241823-omega-healthcare-tops-estimates-sees-flat-affo-year

If I had to choose one European company to put my money into, Sampo would be a strong candidate. So I decided to increase my European exposure with a purchase of 50 additional shares for 42,99 EUR per share. As a valuation it’s acceptable in the current environment. Only downside is that it increases my exposure to Nordea Bank even further. Not necessarily a bad thing but a bit on the risky side. I do suspect that Wahlroos & Stadigh is cooking up something new. There were some rumours about Nordea merger but who knows if that will ever materialise. I suppose they will eventually take control of Topdanmark on the insurance side but that’s yesterdays news really. I just have a feeling that they are up to something that will be very lucrative and perhaps will go through during the next couple of years. Meanwhile better economical environment (interest rates) will support Nordea and dividends from Topdanmark will help to increase the distributions for next couple of years.

I’ve been thinking about this move for quite some time now. I generally don’t like to sell my holding but I suppose every rule has an exception. I originally opened positions in certain bond-like stocks mainly to park money in order to benefit from strengthening dollar. Colgate-Palmolive served that purpose well and most likely would have continued to do so. In general I don’t like to time markets but we are living exceptional times at the moment. Should there be a market correction perhaps triggered by Mr. Trump, I prefer to have this extra ammunition in place for that. And should there not be a market correction, such short term correction might occur for single companies. Defence and space is something that I would like to increase my position in. Then again it might make sense to lock in some of the forex gains by converting dollars back to euros if my forecast about parity ends up being accurate. This remains to be seen.

This was the reasoning behind the decision to sell my 50 shares of Colgate-Palmolive for 64,75 USD per share. In retrospect this should have been done some months ago when the stock was ridiculously expensive. During my ownership I collected 223,50 USD as dividends. I originally paid 65,37 USD per share but currency changes resulted almost 30% profits.

It’s getting really difficult to find decent valuations but for some reason Telia Company has performed quite poorly for quite some time now. It dropped today almost 2% so I decided to buy additional 250 shares for 3,714 EUR per share. Dividend policy is exactly what I expected it to be going forward. 2 SEK annually for next couple of years (+ perhaps additional ones) is quite OK and I still maintain a fair value estimation significantly above the current valuation. Then there’s the additional consolidation option in the sector which should provide interesting possibilities for the involved parties.

In my overall strategy I’ve ruled that the portfolio can contain one pure risk position. In the past this position was filled by VEREIT (ARCP at the time) but since then VEREIT has pretty much completed the turnaround and is now considered as normal position. Today I however decided to open yet another such position with a purchase of 350 shares of Scorpio Tankers Inc. for 4,66 USD per share.

Not a very typical holding for my portfolio as it’s operating in a leveraged cyclical segment I really don’t like nor understand in detail. Main motivation was the assumption of good enough chance of turning cycle, very modern fleet providing competitive edge, somewhat limited downside, significant upside potential and very high yield. I’m hoping to exit this position around 9 USD per share and meanwhile collect the dividends. The exceptionally high yield is a risk indicator and there’s always the possibility for a dividend cut which in turn would test the thesis about limited downside.

There’s also one extra factor in this position. As the company is incorporated in the Marshall Islands, taxation will be a bit different. As Finland doesn’t have tax treaty in place with Marshall Islands, dividends shall be taxed as normal income very much like normal pay check. At the moment this isn’t a big factor but for a long position that could provide interesting possibilities for less taxed dividend income. Not really relevant for me since the taxation is likely to change many times before I’ll willingly decrease my normal income. For pensioners this could be an interesting detail though.

Link: http://seekingalpha.com/article/4023325-scorpio-tankers-stng-ceo-emanuele-lauro-q3-2016-results-earnings-call-transcript

Portfolio and overall markets are in all time high valuations but still there are some investment opportunities available. H&M is one of them. I’m still not a huge fan of the sector in general but the company characteristics, yield, debt and cash balance make it very difficult to ignore right now. SEK exchange rate is also one factor in this process which could turn out to be a positive driver for the future. Today I bought 40 additional shares for 255,80 SEK per share. Depending on the market mood swings I might make identical purchase during Q1/2017.

I’ve been waiting for a decent possibility to add on my existing Lockheed Martin position. Finally Mr. Trump provided one with a tweet about F-35 budget being out of control. Not especially cheap valuation but I still decided to buy additional 4 shares for 248,91 USD per share. I really doubt this will have even short term impact on the company, yet alone long term.

Link: http://seekingalpha.com/news/3229946-trump-takes-aim-fminus-35-costs