Tiny maintenance purchase of 10 shares of Kesko Oyj (B series) at 18,115 EUR per share. Nothing new here. Will just nibble very slowly as share price has increased quicker than I originally expected considering the overall state of economy. Might bite bigger chunks if we see a correction in share price. If not, I’ll just keep of nibbling and see where I end up.
Q4/2023 & FY2023 Results and FY2024 Strategy
Another year has passed and it was yet another with multiple global issues: Russia’s war in Ukraine, tensions with China, tensions in middle east, inflation and energy crisis just to name few. Considering all this markets have been surprisingly strong and in a way western economies have shown even some strength while dealing with these issues. There has been plenty of weakness but for example adaptation to energy crisis was way better than I personally expected. Sadly majority of these issues are likely main topics for 2024, perhaps even for 2025.
Q4 was pretty OK as main dividend account grew 5,67% and whole portfolio produced 2045,84 EUR pre-tax income during the quarter when converted to Euros at the time of writing (of which 181,91 EUR was interest paid for cash reserves, not much but significant indication of the impact from inflation and change in interest rates). Year over year changes were OK for FY2023. Very conservative allocation aimed for controlled dividend income resulted portfolio value increase of 1.78% and produced 10312,73 EUR pre-tax income when converted to Euros at the time of writing. This is minor drop in dividends compared to previous year, mainly a result of dividend cuts (some due to listed global issues, some just because of extra high payments during previous year) and due to exiting certain positions and therefore missing some payments completely (reinvested money will convert to dividends next year).
For FY2024 I have very mixed feelings. Aftermath of said global issues will likely take significant time and especially Finish economy is in very bad shape with the insanely high debt load and increased interest rates. Therefore my plan for 2024 is quite conservative: I’ll try to buy something every month but mainly with smaller maintenance purchases and dividend reinvestments. For now I have my my eye mainly on following companies: Fortum, Kesko and Bristol Myers Squibb. Perhaps also something in the REIT space depending on how the US interest rate cycle evolves.
Recent Buy: Kesko Oyj (B)
Maintenance purchase once again with Kesko Oyj (B series) as I bought additional 20 shares for 17,55 EUR per share. Finnish economy doesn’t look too good and forecasts for next couple of years are indicating decline in GDB. National performance is awful not only in Nordic but also in European context. This is bound to have negative impact on Kesko but then again tax reforms could partially mitigate that. Current valuation appears decent to me but I’ll just nibble with these tiny maintenance purchases while waiting for better valuation. Ideally I would like to aim for a total position of 500 shares but it remains to be seen if I’ll ever get there. I would like to see share price around 16 EUR to make any bigger moves.
Recent Buy: Pfizer
Minor addition on Pfizer with additional 20 shares bought for 30,53 USD per share. Broker had black friday campaign so reinvested some USD dividends without transactions fees. Pfizer has dropped significantly as Covid boost is gone and some people apparently wouldn’t mind seeing Pfizer and others being hit with legal issues. Still, drop seems a bit drastic given the size of the company and impact on whole sector. I will not likely add much on the position though since I consider this sector as one that is best approached with a basket of stocks. If I would be truly able to analyse their backlog, I would probably work in big pharma myself.
Recent Buy: Kesko Oyj B
Maintenance purchase and dividend re-investment once again in the form of 10 Kesko Oyj shares bought for 17,29 EUR per share. Tiny steps and nothing special here. Kesko share recovered already a bit so won’t make any big moves for now. Valuation is still very reasonable given the overall quality of the company and international – well Scandinavian – potential.
Recent Swap: NEL ASA for Nordea Bank AB
NEL reported somewhat weak results. Weak mainly in order intake but as I anticipate challenging investment environment to persist (high interest rates, possibly even a recession) I decided to sell my minor tail position of 2000 shares at 7,05 NOK per share. I sold majority of my position around 30 NOK and original intention was to hold on to this tail long enough to see if NEL will eventually become an established dividend paying company. In current environment I decided to switch to Nordea Bank and bought 100 shares for 9,97 EUR per share as it appears to be very reasonably valued and is benefitting from higher interest rates. It would however be hit by full blown recession but let’s see how the winter goes. Anyway this move positions the portfolio to be more in line with primary strategy of focusing in dividend paying stocks.
See: https://nelhydrogen.com/press-release/nel-asa-third-quarter-2023-financial-results/
Recent Buy: Fortum Oyj & Kesko Oyj
Minor maintenance purchases for Fortum and Kesko. Both have been dropping which was to be expected with Kesko. With Fortum I didn’t expect to see these levels as it seemed to be trading at a slight discount even before. Oh well, market knows better but I still decided to buy additional 50 shares of Fortum for 10,58 EUR per share and additional 30 shares of Kesko for 15,2 per share. Especially Kesko could be hit hard as winter truly is coming for Finnish economy. Companies are going under and change negotiations are starting to be a common thing also in sectors which not so long ago were complaining about difficulties in hiring people. Therefore I’ll nibble on Kesko with these small purchases during next three to six months. Might do the same with Fortum but that position is already a bit larger so might hold off a bit (absolute maximum being 1000 shares for now).
Recent Buy: Mandatum Oyj
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.
Q3/2023 Results
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.
Recent Buy: Realty Income REIT
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.