YTD returns, portfolio rundown (and story about boss)

YTD and COVID performance

I have been a bit busy in work during the COVID mayhem, so I haven’t been writing for a while.

I’m down 10,4% YTD. Those leveraged retail and restaurant plays in Outre-Mer territories and Portugal going in almost got better of me. I was down over 30% at worst with almost 100% stock exposure beginning of the mayhem, and now have recovered some with 70% stock exposure. Almost perfect timing with buying high and selling low.

The not more full stock positions was not strategic choice though, but bad execution. I wanted to get in to stocks faster but all my existing ideas were COVID bombs, so all time went either to studying new stocks or doing overtime in work (which at least was profitable activity).

This thumb sucking was opposite what my boss was doing.

Boss

As for background, he is ex. fund manager whiz kid in a leading Nordic bank who quit and co-started his own corporate finance shop with his childhood buddy. They had quite Buffettish business ventures already as kid. He thinks fund management business is only marketing and corporate finance is the real deal.

He had been on the side lines from markets since I started to work for him four years ago, with a premise that stocks are expensive. I don’t know what his analysis included, mostly intuition, I think. I mean, he doesn’t use time for this and laughs at my elaborate stock theories.

He was showing signs capitulation just before COVID, as I was talking my ideas and close being 100% stocks. Then when the shit started to hit the fan he went to from like I don’t know 100% stocks to 0% stocks in a heart-beat, put the firm on hold, sold my whole calendar to our customer until summer, and started day trade.

Then after longing and shorting stocks and indexes for a while, he bottom-ticked COVID by not more than week or so. I know this because we were talking daily at that time about markets.

He bet like 100% on Finnish blue-chip industrials with premise that 1) what is going to happen to these industrials in COVID mayhem, it’s the consumer stocks that are going to get hammered, and 2) market started to behave like it was not in full panic anymore as stock that should not go down did not go down in panic fashion anymore.

Anyway, the point is that he winged it and is up probably 30-50% YTD vs. with my stock theories I’m down 10%. He says that market is again too expensive for investments and only way to make money is day-trade. Sometimes I get Druckenmillerish vibes about him.

2012-2016 seemed to work for my kind of stocks, you can read my older posts… but 2017-2020 not so much. Market has shifted but I clearly have stand still. I’m already about 15% funds + index funds so I have started the mental shift that other people understand this game better than me,

Portfolio rundown

Had a chat in Twitter dms about my portfolio and ideas, and earlier with someone else on email.

Here’s quick copy of the chat and my portfolio rundown (I edited it for clarity):

“First some value stocks

1) Biggest position is Boustead Projects. The case is that they will spin their real estate portfolio (probably through REIT), which net of debt, should be more than stock price now.

2) Cambria Automobiles, where sales mix is changing to luxury cars, which might be underappreciated, very low multiples (note luxury car sales in China are booming during / immediately after COVID).

3) Citycon 0,6x or so NAV Nordic shopping center owner (world’s best?) with high exposure to daily convenience in tactically excellent locations near transport hubs near where people live.

About 20-25% more NAV about to come from development profit from apartments built on top of the shopping centers. Comps down only -4% in COVID mayhem, world record for shopping center in lock down countries?

Then some growth stocks.

4) Tinkoff Credit, which was in Vostok Emerging Finance’s portfolio and oligarch free. Growing 20-30 % p.a. and is under 10x earnings.

It’s fintech-robinhood-fintech platform-super-app- in modernizing Russian financial market, which is backwater currently, but digitalizing fast. Tinkoff will be one of the winners.

Currently, biggest profit center is credit cards, the second largest credit card issuer in Russia. Credit losses are quite high but so are rates.

5) I have watched Detskiy Mir in Russia, which is growing 20% p.a. in children goods vertical. It has 75 % free float, probably only stock in Russia with so diversified share structure. About 13x trailing earnings, but I don’t have a position.

From now on, the competition is against local Amazons, which seem to have better web platforms, instead of the brick-and-mortar-mom&pops historically.

Is this why the anchor shareholder is exiting? Management is highly incentivized for stock price, so maybe they can get the UI, search and discovery functions in the webstore working.

6) Ferronordic Machine @ 4-5x 2-3y forward PE. They have blue ocean in Russian mining contracting, which is non-existent market in Russia currently but standard elsewhere, Kazakhstan construction machine dealerships and Germany truck dealerships.

7) Vente-Unique, decade of double digit profitable growth in furniture e-commerce in France 0,5x revenues.

Then some long shots like

8) FNAC=Bestbuy

and some stable leverage plays like

9) Milicom 3-6x or what FCFE, I haven’t checked for a while,

10) Leonardo 5x earnings with whole market cap or so profit in order book and limited exposure to civil aerospace, and “deal of the century” weapons deal pending in Egypt.

And one unstable leverage play,

11) Capri Holdings, where I’m betting on Versace comeback, after reading 20 years of Vogue last years (exaggerated, but..).

I probably forgot some but long shots and leverage plays are small positions.”

Yeah, I forgot Assystems, which is top nuclear engineer in the world. The owner/co was building the French nuclear fleet in the 60-70-80-90s and seems to have some knack on capital allocation. France is 70% or so nuclear, so their position is strong.

World has 400+ nuclear power stations of which most were build in 70-90s and they are coming end of their licenses. They need to be replaced, extended or dismantled, which all drive engineering demand.
So prospects per my amateur analysis should be excellent for coming ten years, regardless of what happens with nuclear generation. And this is just the existing fleet. All major nuclear energy forecasts are estimating growth in the capacity, which would additional +++.

I shall call next decade “Decade of the nuclear engineer industry”. Note that I haven’t done much work on this and have no background in energy, maybe some energy guys could comment?

They also have minority stakes in nuclear reactor technology company Framatome, which might prove interesting at some point.

Minus is big JV stake in aeronautics and automotive engineering consultant, which is getting bombed.

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