We are quickly approaching the year of the dragon, a special year for Chinese people. In the past birth rates would go up as its extra lucky to be born during a dragon year. Given how extreme the Hong Kong market underperformed the rest of the world in the past 3 years, I just have to talk about the opportunities it presents. In this post I will present 8 stock pitches of what I believe are excellent companies selling at rock bottom valuations – take your pick!
There are probably a number of investors that are, contrarian in nature and know that opportunities like these is when you are supposed to pounce, but haven’t spent enough time on HK listed stocks. This is your introductory guide to do further work in the pockets of the market that speak to you. Let’s dive straight into it.
Risks with investing in Hong Kong
The Hong Kong stock market is broad with many different types of companies, depending on what risks one wants to avoid one can look at different pockets of the market. One should clearly stay very skeptical before investing in Hong Kong but there is also a limit to how cheap something can be. In my view at these valuations it makes sense to have some HK risk in your portfolio. One can dream up very bad tail events, for example given what happened with investments in Russia. But even with such a negative scenarios I believe in some HK listed stocks you won’t be more hurt than investing in for example Apple. Be skeptical but not paranoid is my view on this. This categorization I myself use to understand what risks am I exposing myself to with a HK investment.
First categorization – Who owns it
Chinese state owned enterprises (SOE)
The main benefit of these companies would be that you are aligned with the CCP. These companies enjoy preferential treatment by the banks and the government. They can for example get deals other companies do not have access to. Quite often the valuations are very low and the stocks are more a dividend play than a play on revenue growth and some type of payout far far in the future. It’s almost like a long duration corporate bond position betting on that China won’t withdraw fully from the world financial markets.
Chinese family owned
This is a very common category among HK listed companies, you find that many companies are lead by one family and nobody else will ever make the decisions on how the company is run. Investing with the family then to a large degree becomes about looking at that families track record and how have they in the past rewarded minority shareholders? Obviously you here also run geopolitical risks if you are based outside of China.
Non-Chinese family owned
That a non-Chinese family would decide to list their company on the HK exchange is much more rare, but there are still quite a few examples and some of them are very interesting. This category is also what potentially could be closest to babies that have been thrown out with the bearish bath water. As even if worst case scenarios happened, since the family owner is not Chinese, the company would most likely just re-list elsewhere (if it’s not feasible to be listed in HK anymore). Probably a painful process depending on what has happened in the world but at least not impossible.
No majority owner
This is also a decently common category, quite often there is still some family involved but for whatever reason they did not manage to maintain total control over the company. There are of course companies with just funds etc as largest owners, but this is not nearly as common as it is in the western developed markets, at least not among better run companies.
Second categorization – Where do they sell
Companies mainly selling into China and/or Hong Kong
Many HK listed stocks is a Chinese business, selling products mainly in China. With these companies one has to have both some understanding of the market, but also some belief in that the Chinese economy won’t totally crash. This is hard for many investors to get a grip on, me included although I lived in Hong Kong for over 10 years.
Companies selling globally
This category is much more comfortable to many, me included. Here the products can perhaps even be found in your home market and you can perhaps even have an edge over Asian investors if you can inspect the products at your local Home depot, Walmart or whatever the product may be selling.
Third categorization – Dividend Payout / Buybacks
This is tackling the risk from another perspective. Something can stay cheap for a long time, but if you get paid a high dividend to wait, it is much less painful to wait for the revaluation.
Here I will divide it into three categories. Companies with:
Low dividends and/or buybacks (0-3%)
Medium dividends and/or buybacks (3-6%)
High dividends and/or buybacks. (6-10%+)
Drawing the line what is investable
So some people will draw the line and say I don’t invest in SOEs. Others actually go the other way around as say, well at SOEs I at least will get my dividend, they won’t go bust no matter what. Others won’t trust Chinese family owned companies in fear of never seeing any of the cash flow generated making it back to their pocket. In the same way some people feel comfortable over the whole spectrum of where the sales happen in China or outside. The good thing is that no matter how skeptical you are, there are still some pockets that should not seem un-investable to you. With all that out of the way, let’s look at companies in these different categories, how cheap they now are. Press Read more to see all specific stock ideas..
After two years with around zero returns (but a lot of volatility), like many others the GSP portfolio sprinted towards year end managed to eke out a return of +13% for 2023. This compares poorly to MSCI World at 25%, in-line with MSCI World ex USA and quite favorably versus Hang Seng at -14% (what an insane spread). I’m still quite far off my ATH which was set back in May 2021.
Returns since blog start:
Thoughts about the past year
The start of 2023 was the middle/end of the massive Hong Kong stock rebound due to China reversing it’s Zero Covid policy and literally overnight removing all Covid restrictions. The bulls were out and it the big re-opening revenge spending was anticipated. I was fully loaded on HK stocks, having further increased my positioning in the 2022 autumn crash, using mainly my Swedish Match buyout proceeds. I knew I took some risk increasing my position so heavily to HK stocks, but the sell-off was just too brutal and quick, there had to be a bounce. Luckily for me it came and when it had run it’s course I reduced my HK positions again and have continuously over the year had as a rule for every increase in HK stocks I had to make an equivalent decrease in other HK stocks. This basically saved my year as Hong Kong continued it’s brutal slide after a bounce which only lasted until end of January.
Portfolio composition beginning and end of the year
The main reason Hong Kong is still such a significant weight is spelled Modern Dental Group (3600.HK), which is up an amazing 78% in 2023 in a market where the Hong Kong small cap index was -23%, just incredible. Due to the meteoric rise of ZimVie at the year end snap, it was only my second largest position but after some profit taking the last week in ZimVie, Modern Dental is back on top and remains my highest conviction idea.
2023 the year of bad portfolio calls
So if selling Hong Kong stocks (but keeping the MDG that bucked the trend) into the January rally was a master stroke a lot of other portfolio changes was rather the opposite. I prided myself in the past with how my portfolio changes added to my returns and so far almost every year my portfolio changes have been accreditive (something I evaluated quite thoroughly). If we disregard from the “HK moves”, 2023 was the first year I failed miserably at this, basically selling huge winners and adding to losers. Let’s have a look:
Synektik – I had done a full write-up on Synektik the Polish healthcare company in the past (company installing Da Vinci robots, servicing and production of other contrast fluids). My case was built on that the upside would come from the cardiotracer and as that did not materialize as I had hoped, I disregarded how well the rest of the company was doing and sold my shares at 35 PLN per share. Synektik today trades at 91 PLN per share.
GreatView – I could not take more pain in GreatView Aseptic, I company I held and covered closely for years when the majority shareholder sold their shares to Yili. Their major customer Mengniu got upset with the competitor having influence over the company. I almost bottom ticked my final sell at 1.65 HKD, there would have been plenty of opportunity to get out above 2 HKD if I just kept my cool. What Jardine Group did here I will never forget and I will never touch anything which is under their influence ever again. As a small side note, the Yili/Mengniu conflict seems to have been resolved with a share issuance to Mengniu.
RaySearch – I had spent considerable time researching this company (full write-up done). But the question was if there was trouble on the accounting side, I felt decently comfortable, until the new CFO (again) was fired from the company. I could not believe it and decided I lost my trust in the CEO, I sold all my shares (I had built this up to one of my largest holdings at the time). Again I more or less bottom ticked the stock for the whole year, selling at 57 SEK. The share trades today at 90 SEK. This one was the most bitter of all, due to the high conviction I had in the companies products (but not enough conviction on management). The market later choose to focus on the results, which was really good the rest of the year (after I sold) and stock marched steadily up from where I sold it.
Other noteworthy stocks
CNOOC – The exception from my “rule” of no increase of HK holdings, was CNOOC. This was a short term play on picking up two dividend payments in less than 4-5 months time. CNOOC paid out 0.75+0.59 HKD per share over the summer period. So I picked up shares end of April in anticipation of this for 12.3 HKD per share. With some luck the oil price went up, so not only did I get my dividend but also managed to sell my shares (in two tranches) at 12.8 HKD per share. Even in a shitty HK stock market sentiment you can find good trades. If one want’s oil exposure as a high dividend play, this is still one of the best ways globally to get that.
PAX Global – This has been one of my top holdings, a high conviction position that I fairly “suddenly” changed my mind about. First I reduced my position during the January bounce and still sold some shares into Feb and March. End of August I exited my position fully, I just felt that I had given the management the chance to further improve dividend payout ratio, but they didn’t really, at a time when it was really needed. On top of that I had this fear that due to trade wars, USA would go out and ban payment machines made in China. This is wild speculation on my side and rather a black swan event but I believe it could happen, in this market PAX would be down 50-60-70% on such a day. I couldn’t live with that tail risk as there were other safer ideas that I really liked. In a better environment for HK stocks with less geopolitical overhang, even if PAX management is not the best in terms of capital allocation I still think this is a very interesting company, go anywhere in the developed world and you bump into PAX payment machines, its pretty amazing.
L’Occitane – Someone on Twitter made me aware of how L’Occitane’s latest purchase Sol de Janeiro was performing really well. Since I followed this stock for years it was quite easy for me to pick up the threads and just read about on the SdJ brand, which was new to me. To more I read and listened to influencers etc, I realized they had striked gold with SdJ. I bought a medium size position just before the market started to reprice the stock on a rumour of a buy out from the majority shareholder. Long story short, a really strange turn of events happened – again! Kind of a theme in stocks I’m in unfortunately, so the deal was on the table and then the majority owner turned around and changed his mind. I thought the buyout made ton of sense, apparently he didn’t. I would have liked to book a win in a tough market, instead I get a chance to own a company with a really fast growing product. I tried to benchmark how popular SdJ is on social media etc, to me it looks like it’s hitting very high basically among top 10-15 cosmetics brands worldwide. I expect monster sales from SdJ in the next report and I hope the majority owner regrets not buying out the company on the cheap.
Marimekko – In my rotation away from HK I have tried to find new good ideas. The one that worked out so far and I still believe in long term is Finnish designer brand Marimekko. I think this is a typical example where someone like me, with a Nordic background living in Asia can spot something before most people do. I believe Marimekko as a niche brand has a very strong market position among the small group of people that are drawn to their type of design. The brand is extremely popular in Japan and trying to replicate this in the rest of Asia. They are doing clever cooperation and cross-overs with larger brands, most recently Uniqlo. It’s always hard to guess fashion trends and Marimekko is not a super cheap stock here but I do think they will succeed decently well at minimum with their Asia expansion. So far I’m up some 30% on my position so market also seems to agree. What I like with these smaller fashion stocks is that you have kind of an imbedded call option if the brand really hits a craze. For example Swedish company Fenix Outdoor did such a journey 10-15 years ago with their Fjällräven backpacks. This was a brand we Swedes knew since we grew up, but they took that heritage and managed to push the brand worldwide and again especially in Asia. Marimekko has a similar strong brand for Finnish people but the brand is almost unknown outside Finland. If Marimekko manages half of what Fjällräven did I will do really well.
Thought’s about this blog and it’s future
For the long time reader, one would have noticed how the pace of writing has decreased the past few years. This has partly been due to not fully finding the same motivation to write but also some health problems, which now are finally fixed! In 2023 I only did 5 posts, a record low! On the other hand the last two stock pitches has turned out really really well (so far). I have spent quite a lot of time thinking about how and in what way I should continue this journey.
The blog has been a bit unusual in the sense that I have given very high transparency on my positioning and trades done. For a few years you could even search and see each trade done in my portfolio through a small database on a specific tab. The purpose of me starting this blog, was to evaluate if I could beat index investing, have fun and hopefully learn a lot along the way. The blog kept me honest and accountable for what I did. I also had to do the work properly as I could not post a semi finished thought or stock idea, I needed to cover all bases. This has been incredibly rewarding for myself. I look back at my posts from my first few years and feel I developed a lot. I had good intentions back then and I think I put good structures in place. I also got a few big things right, the call on EVs 2016 was great but I did not really have the experience to capitalize fully on it. Avoiding traps and really doing the work on a company was not there back in 2016. That’s something I’m confident I can do now, if I just have the time. Buying into ZimVie late 2022 around 8-9 USD getting a small quick gain and then getting hit with a -40% day, that’s not something I would have had the confidence to handle well 2016. Today I can keep my cool, it’s not my first rodeo losing 40% on a day in a stock. I can think it through rationally and decide. As in this case I decided I’m right and the market is wrong and I will double down at 6 USD per share. I recently took my first profit at 18 USD per share in ZimVie, this decision alone saved my year up 13% instead of another year close to flat returns.
Basically I have fulfilled the purposes I set out back in 2016, now close to 8 years later I’m a significantly better investor and although I invested close to half of my money on the Hong Kong exchange, I have beat the MSCI World (although barely). I have crushed the Hang Seng Index, or just World stocks ex USA for that matter. Ok enough of bragging, I’m still quite unsatisfied with my returns, as I know it could have been so much better with less focus on Hong Kong. So with this in mind it’s time for something new and different. I’m not sure if it will sadden you or not but I will not do anymore portfolio reviews. No more posting of all my holdings. The focus will shift to just discussing ideas, like thematic stuff I posted in the past and specific stock pitches of course. In what format I would do that I have not fully decided, but it will most likely not be in the shape of only as GlobalStockPicking anymore. This blog has been here to document my investment journey and my full portfolio, a fresh start will probably be better for a new format. I will take 2024 to set out a new path and let’s see what I come up with in the future. Stay tuned 🙂
Neck and spine problems will be on the rise in the future. We stare down into our smartphones all day and spend too many hours sitting (with bad posture) in front of our computers (old post for more on this link). OssDsign has a very interesting product, in a small but important niche of this market. The product has high gross margins and is used in spinal fusions.
Market Cap: 630 MSEK / US$60m
Explosive Growth: Newly launched bone graft product (My estimate 100 MSEK run-rate in sales)
High margin: Gross margins should be 80%+
Large total market: Total market estimated above 1.25bn USD for USA only.
In this same spine space, I have taken a position in Zimmer Biomet spinoff ZimVie, which is targeting the newer technology of disc replacement. OssDsign is trying to bring innovation to the old and current gold standard of care, spinal fusion. OssDsign believe so much in their newly launched product that they are willing to close their previous main business line and fully focus on the new. At the same time, in a poor market environment for micro caps, the company managed to raise a substantial amount of cash from investors. Even more impressive was that this direct share issue was done around the current share price, so dilution happened at quite “fair” levels for existing investors. The product has 80-90% gross margins and has potential to be used in a large number of surgeries. All-in-all this is a high risk, high reward case where the odds of bringing this product to market is much higher than for Pharmaceutical products as there is no need for Phase 1/2/3 studies to launch the product.
Spinal fusion patients are usually in tremendous pain and have often suffered for many years before a surgery is decided as the last option. Fortunately like many medical procedures, spinal fusions success rates have increased tremendously over the past 30-40 years and evolved from one of few bad options to the gold standard of care. Due to poor results of this procedure in the (far) past, it still has a quite bad reputation. The Spinal fusion procedure can simplisticly be explained as to remove the disc between two bone segments and then trigger the two bone segments to grow together (fuse) into one solid segment. Except the surgeons expertise in performing the steps of surgery, the most crucial component for the success of a fusion is to get as high confidence as possible that the full fusion will happen. Although outcomes have improved a lot over the years, that the fusions does not happen or partially happens, is still the weakest link of this surgery.
This is what OssDsign is trying to solve with their Catalyst bone graft material, where the idea is that the graft fills the void of the disc and triggers bone growth. The product sells at an ASP of about 2500 USD and depending on surgery different volumes of the product is needed. Together with two main competitors OssDsign have a bit of a first mover advantage here in a new generation of products coming to market increasing the interest from doctors to move to a synthetic solution instead of the other options available to them.
Although hard to exactly estimate, around 500 000 spinal fusion surgeries (lumbar and cervical) are done each year in the US. So with some quick math’s of 2500 USD of OssDsign product per surgery the market size OssDsign is competing for is about 1.25bn USD. With an aging, obese population the number of surgeries just keeps growing. Given the rapid increase of spinal fusions, a both efficient and cost effective solution for creating stable fusions of the bone is highly desired by surgeons. As a small company out of Sweden, it might seem far fetched that they would win the US market. But together with 2 other players (where one is also a small company) they are the only ones seeing FDA approvals and all indications so far seems positive towards a chance to win a decent market share in this segment. The upside for OssDsign even at 5-10% market share is very substantial as this is a high margin product. Let’s try to dive deeper into this topic.
OssDsign listed in 2019 for 27.5 SEK per share and today it trades around 6 SEK per share, not a great outcome. What the company has done historically is unusually irrelevant though. The company you are purchasing as of today, is vastly different to what was listed in 2019. How come the company has changed it strategy so drastically and quickly? OssDsign listed as a 3d printed cranium implant company with a titanium-reinforced calcium phosphate plate. I don’t think the company necessarily done anything wrong in launching this product into the market, the problem, I believe, is that its just too niche. Yearly sales have roughly doubled since pre-IPO from some 20 to 40 MSEK. Although it could probably scale further, there is not enough patients in need of these type of cranium implants to really deliver shareholder value from this one product. In the hot “free money” era, OssDsign then decided to expand its produce range by an acquisition. OssDsign recently announced that they will abandon (in best case find a buyer) the cranium business and fully focus on their spinal fusion product Catalyst (which was the acquisition they made). Below is a timeline of the Catalyst product. Press read more..
ZimVie completed it’s spinoff from 29bn USD MCAP Zimmer Biomet (ZBH) in March 2022 and traded around a 800-700m MCAP + some 600m USD of debt after spinoff. The MCAP has since then shrunk to around below 150m USD and lately rebounded to 350m USD. The company is active in two segments: Dental (main product teeth implants) and Spine (main products spinal fusion and disc replacement).
Zimmer Biomet comes from a long history of spinoffs, mergers and acquisitions. Zimmer was spun off from Bristol-Myers Squibb in early 2000’s. Including in the spinoff was the dental business which back then was a main segment within Zimmer (now part of ZimVie). In 2016 Zimmer Bio acquires LDR Holding for about 1bn USD, with the flagship product being Mobi-C artificial disc, which now belongs to ZimVie (current EV of ZimVie less than the Mobi-C purchase).
ZimVie is a small company holding unique assets and in a unique position. To establish products on a global scale like ZimVie’s has you need a massive sales network, this is something normally only large companies have the muscles to do. ZimVie coming from large Zimmer Bio has the benefit of being a small company but with that reach pre-established by a large company. Now the question is they can right size their business and leverage the advantaged they have. Press More to read the full story
I promised in my “Summary 2022” to comment on the holdings that contributed most positively/negatively in 2022, they happen all to be Hong Kong stocks and among my largest positions.
Best stocks in 2022 – PAX Global and Vinda
Worst stocks in 2022 – Modern Dental & Greatview Aseptic
All four stocks have been reduced somewhat to raise cash during Jan/Feb but they are still high to fairly high conviction position. So without further ado let’s jump into discussing these for stocks. (click read more for a mega post)
In the early days of my blog I talked a lot about my investment process, how I tried to combine top-down analysis of long term trends with bottom-up stock picking. I still think the best ideas comes from this approach, you identify something the market has not fully appreciated yet and then you find the best company in that something area and you buy that. Hopefully you both got a discount because the company is trading cheap and you get exposure to an area/theme which in general is trading at a discount because the market has not priced in the outcome you see. As both these things re-price you get a double re-pricing effect, which can be very powerful. In this case this trend is not news, but I think I found a pocket of this trend which is not appreciated how much it will grow. Also unfortunately the company is not cheap on trailing multiples, but it is at an infliction point where growth is pulling up margins quickly, so a few years out it does not look too expensive.
Now that I have been doing this for quite a while, I can start to evaluate my track record also on my top-down analysis. Maybe somewhat surprising I feel have got the long term trends more correct than my actual stock picking. Expressed a different way, even if I figured out where the world is going, betting on the right companies that benefit from that has often been far from easy. So what I have tried to become better at is the stock picking part and not get too excited about the top-down analysis. If no good enough company presents itself at the time, I will keep my world view in mind and keep my eye out for a suitable investment, but I won’t force it. For this top-down analysis I have definitely taken my time and it has taken me an incredible 2.5 years to find two investments to express the very long term tailwind I see from the theme of (excessive) smartphone usage. That I found both stocks almost at the same time was partly by coincidence and partly that the growth sell-off has given me opportunities to buy stocks which otherwise were too expensive (not enough margin of safety).
This post is really the part 2 of the investment theme idea started 2.5 years ago, so it’s essential to read what I wrote back then first.
The Part 1 goes into detail of problems for the neck (cervical spine) I will below expand on the issues related to myopia (not being able to see objects far away). After that I will do two separate posts to present the investments I made in two US companies to benefit on these strong tailwinds. One of the investments I already revealed and invested in ZimVie, which is related to neck issues. The other will be revealed towards the end of this post and is then obviously myopia related. So let’s get going on the Myopia background (press to read more)
This has been one of the most eventful years since I started investing, I would say only 2008 tops it for me. War in Ukraine, crazy inflation, huge rate hikes, collapsing currencies and China who locked in their population to keep dynamic zero. And with all these events happening, my return for the year is anything else than spectacular – a meager -3.5% (but great vs MSCI World at -18.3%). Last year I dodged being down with a slim margin, but this year, unfortunately, became my first down-year since the blog started. I’m actually surprised I fared as well as I did given I was down 20% in October but with the strong Hang Seng rebound I was back in the game by December. One can try to be a stock picker like me, but in the end Beta matters a lot for your performance. Being allocated mostly to European and Chinese stocks I’m proud how much I out-performed these markets both this year and previous years (since the blog started MSCI World Excluding USA is up 17% and I’m up 123%). At the same time it has been such a big mistake to be so underweight USA previously. 2022 was the first year in a long time where Hang Seng did actually not perform worse than MSCI World, so finally I did not fight a headwind and as such I was back to printing alpha!
So without further ado here are the 2022 results (as always results in USD)
The share with holding period less than 1 year where bought during 2022 (best purchase Vitasoy, worst purchase Anicom).
Best stocks in 2022 – PAX Global and Vinda
Worst stocks in 2022 – Modern Dental & Greatview Aseptic
Instead of making a massive comment about these stocks here I will do a separate write-up of these four holdings, this also ties into my topic below about exposure to Chinese stocks – to be continued!
A number of holdings were sold during the year:
Overall the holdings I sold gave a positive contribution to my 2022 performance of about 3.5%. (press to read more)
After a fairly long period of lower activity both on the blog and holding wise, in these past weeks I have sprung to action to make some changes. Others like Swedish Match were force upon me, now to be fully bought out by Philip Morris. This is a quite a dramatic change to the portfolio and Swedish Match leaves both very big shoes to fill and a lot of cash to deploy. I also have a new holding to reveal, so let’s go through the changes. But first let’s start with some brief thoughts about the market and all craziness that happened during this year.
Time to reveal my first investment in a truly Japanese company (that is bought with Yen and only listed in Japan). What really triggered me to pull the gun was the significant JPY weakening we have seen lately, with only domestic sales I’m fully exposed to the Yen in this holding, let’s dig into Anicom Holdings!
Dominant insurance company in it’s niche of pet insurance in Japan (estimated 44% market share).
Strong growth: 10 year Revenue CAGR of 14% and 5 year of 6%.
Founder led with CEO who still holds about 8% of outstanding shares.
Core of the thesis is really about Japanese mindset change of the role the pet has in the family. This will over time increase insurance penetration.
Moat built from highest coverage of direct settlement of bill at veterinary as well as regulatory barriers for insurance companies.
Pet industry in Japan
Anicom has been responsible for much of the growth in the Japanese pet insurance market over the years, however there are still relatively few pets covered by insurance at this time. According to figures from a 2020 Japan Pet Food Association survey of dog and cat ownership, there are roughly 18.1mn dogs and cats kept by Japanese households as pets, and only about 12% of these are covered by insurance. The UK has 16.5mn dogs and cats (8.5mn dogs, 8mn cats; about 25% of the human population in 2017) but pet insurance covers more than 25% of UK pets. So adjusted for population, UK has about twice as many pets and twice as high rates of insured pets. If Japan overtime would reach UKs level of number of pets as well as insurance penetration that is a four fold increase of the market.
As you will see below, the number of pets owned in Japan is in a rather steady state (dogs decreasing, cats increasing). Considering that the population has decreased with a few percent in this timeframe and will continue to do so, is a natural headwind. As a tailwind is that interest in pet ownership is up, but somewhat held back by the supply of especially dogs. There is a more interesting story than the steady state of pet ownership and that is around the mindset of the owners. As you also can see below the industry keeps growing in size although number of pets is not growing. We can only attribute this to the changing mindset around pet ownership. More and more pet owners puts the pet in a family position, where no costs are spared for the pet to have a good life. As a US pet insurance CEO put it: In the past 20 years pets have moved from the backyard to inside the house, and now they are moving from the house into the bedroom and even on to the bed. Press to read more..
It’s been difficult six months to try to find somewhere to hide, I have taken some hits but managed to navigate the downturn decently well.
My portfolio detracted -11% in the first half of 2022 vs -20% for my main benchmark MSCI World Total Return, both denominated in USD. Never fun to be down, but after a very weak 2021 I’m of course pleased to finally stay ahead of the index. I have talked a lot about the US market and the USD in the past. Being underweight the US market has for a very long time been a big mistake. This is probably the first half year in a long time when its been positive. The USD itself feels like one of the main macro factors to mention for this period as many compare their returns in their local currencies, which of course comes out favorably if one compares returns in a currency that lost a lot to the dollar. The USD is just insanely strong right now, this has been a big detractor for some of my investments denominated in Swedish Krona, Polish Zloty and Euro.
Returns for first half 2022
Below is the returns for my holdings during 2022 and the ending weights (not including dividends). For example Swedish Match has been a larger position but has been sold down over the past months and Modern Dental has been increased after it already fell. My position sizing and buying/selling has had a major positive contribution to the outcome.
Returns since inception
Quick comment on each holding
There is a lot to say about this half year in terms of Macro etc, but I will try to keep it as brief as possible with some thoughts on all my holdings. I hate to be so non-humble but my “everything is a bubble post” from January this year was timed almost perfectly for the start of the downturn. Ok bragging over, press more and read all thoughts on my holdings: