2022 overview
2022 was a in absolute phrases fairly unhealthy, in relative phrases nevertheless very fortunate. The Worth & Alternative portfolio misplaced -3,9 % (together with dividends, no taxes, AOC fund as of 30.09.) in opposition to -16,7% for the Benchmark (Eurostoxx50(25%), Eurostoxx small 200 (25%), DAX (30%), MDAX (20%), all efficiency indices together with Dividends).
Hyperlinks to earlier Efficiency evaluations might be discovered on the Efficiency Web page of the weblog. Another funds that I observe have carried out as follows in 2020:
Companions Fund TGV: -33,6% (30.12.)
Profitlich/Schmidlin: -19,2% (30.12.)
Squad European Convictions -14,1% (30.12.)
Ennismore European Smaller Cos (30.12.) +3,8% (in EUR)
Frankfurter Aktienfonds für Stiftungen (30.12.) -17,3%
Greiff Particular Scenario (30.12.) -3,5%
Squad Aguja Particular Scenario (30.12.) -19,2%
Paladin One (30.12.) -19,1%
Many of the “Lengthy solely funds” within the peer Group have been clustered collectively close to the benchmark in a decent vary of -14% to -19%. The one constructive peer was Ennismore, which is an extended/brief funds.
TGV Companions, which is a part of the portfolio, was the weakest fund this yr after being one of the best funds final yr. In any case, a one yr efficiency is barely a snapshot, rather more vital are long run observe data.
Over the 12 years from 12/31/2010 to 12/31/2022, the portfolio gained +336% in opposition to +120% for the Benchmark (Eurostoxx50(25%), Eurostoxx small 200 (25%), DAX (30%), MDAX (20%), all efficiency indices together with Dividends).. In CAGR numbers this interprets into 13,1% p.a. for the portfolio vs. 6,8% p.a. for the Benchmark. As a graph this appears as follows:
Present portfolio / Portfolio transactions
New positions:
In 2022, portfolio exercise was fairly busy as already talked about within the 23 Investments for 2023 put up. New positions have been: Nabaltec, Photo voltaic, DCC, Royal Unibrew, Gaztransport, ABO Wind, Rockwool, Sto SE and Recticel.
Out and in in 2022 went 7C Solarparken, Energiekontor, PNE Wind, Belimo, Steico, Va-q-tec, Kingspan, Exmar and 3U Holdings. Excluding Exmar and 3U (particular conditions), the others have been a part of “basket trades” that by nature are extra brief time period oriented.
Bought positions
In 2022, I offered ABB, Euronext, NKT, Nexans, FBD, Richemont, Washtec, Zur Rose, Bare Wines, Play Magnus and Aker Horizons. The present portfolio per 31.12.2022 might be seen as all the time on the portfolio web page.
Some Portfolio statistics
The weighted holding interval as of 31.12.2022 has been 3,7 years and is inside my goal of 3-5 years. The 10 largest positions account for round 56% (53%) of the portfolio, the largest 20 for round 87% (82%).
Allocation by nation (ex Funds):
| Nation | |
| FR | 21,6% |
| DE | 17,1% |
| SW | 12.4% |
| DK | 10,4% |
| UK | 5,6% |
| IE | 4,6% |
| CA | 4,4% |
| NO | 3,8% |
| SE | 1,2% |
Allocation by foreign money(ex funds):
| Forex | |
| EUR | 39.2% |
| CHF | 12,4% |
| DKK | 10,4% |
| GBP | 10,2 |
| CAD | 4,4% |
| NOK | 3.8% |
| SEK | 1,3% |
| % |
From a rustic / foreign money perspective, that is clearly a European portfolio, inside Europe it appears comparatively diversified.
“Lively share” vs “do nothing”
The “Do nothing” method, i.e. simply letting the Portfolio run from 31.12.2021 and accumulate dividends would have solely resulted in a efficiency of -10,6%, so my “lively contribution” in 2022 was once more fairly good.
The principle cause for this have been have been new or short-term positions resembling Exmar, Gaztransport and particularly the “Freedom Vitality” basket which added round 200-300 bps. Additionally an early exit from Zur Rose and Washtec clarify a part of the distinction. That is now the second yr in a row the place the “lively share” was very vital.
So at the very least for me, being lively in my portfolio appears so as to add worth that offsets the tax impression I’ve at a private stage in comparison with “do nothing”. Nevertheless I don’t count on thtis to proceed to such an extent.
Month-to-month Efficiency 2022
As previously, the relative outperformance was principally made in months when the Benchmark didn’t do properly. The portfolio appears much less unstable because the benchmark. A part of that is the typical money allocation of round 10%, but additionally a timelag between the extra liquid benchmarks and the widely much less liquid shares that I personal.
As an example each, in August and December, it took a while till my portfolio positions reacted on the nice earlier month within the indices.
Annual returns
The relative outperformance in 2022 was unsustainably excessive and a mixture of a few fortunate elements that I’ll talk about within the subsequent paraghraphs. 2022 was the third destructive yr for each, the Benchmark in addition to the portfolio. Curiously, 2022 was the worst yr since 2011 for the benchmark however solely the third worst for the portfolio.
Errors made in 2022
The most important errors in 2022 was clearly to not promote or scale back Bare Wines earlier as outlined in a seperate “put up mortem” put up. One other mistake was to not observe upon my 2021 Efficiency evaluation concept:
The one concept that I’m considering is to purchase “very far out of the cash places” on the “nothing will ever go unsuitable” shares like Google, Microsoft or Apple. As a result of one thing may go unsuitable in some unspecified time in the future in time.
What went properly in 2022
As in 2021, I used to be in a position so as to add a few “respectable firms at respectable costs” that I can hopefully personal for a few years, resembling Nabaltec, Abo Wind, Royal Unibrew, Photo voltaic and DCC.
As well as, I used to be in a position to establish two very attention-grabbing particular conditions with Exmar and 3U. Nevertheless, particularly with regard to Exmar, I used to be very fortunate with timing. Additionally the “Freedom Vitality” baset labored properly. Right here I used to be fortunate to have seemed already at renewables earlier than, so I may pull the set off shortly.
Lastly, I managed to stay extra affected person when a inventory goes up, for instance with Meier&Tobler, the place I managed to carry on for a for much longer time then I might have a few years in the past.
What I’ve discovered in 2022
My manner of inventory selecting ends in a portfolio that may do comparatively properly in most environments, but when fundamentals change, it actually is sensible to take a look at these positions one after the other and “weed out” these positions that basically may undergo. As talked about, I added a extra structured half yr evaluation that I plan to do as properly in 2023.
Each, with Zur Rose and Bare Wines I additionally discovered that with extra speculative shares, it doesn’t repay to attend for a flip round.
Outlook & Technique 2023
If I look via my annual efficiency evaluations, the outlook and technique is sort of all the time the identical: Keep Cautiously optimistic and proceed to do what I’ve been doing and attempt to enhance steadily.
For 2023 I believe it is necessary to not fall into the lure to assume that some “Tech fallen Angels” are low cost as a result of they’ve fallen by -80% or extra. If historical past (Dot.com) is any information, many of those enterprise is not going to survive of their present kind. For these few who will transform respectable and even nice companies, it may take a very long time till their share costs will recuperate.
Curiously, plenty of right this moment’s “progress buyers” have by no means skilled an extended time period the place even excellent shares have been undervalued for a while. There nonetheless appears to be plenty of FOMO out there and everyone seems to be in search of the massive 2023 bounce again in “progress shares” when inflations goes down and the FED eases. There may be clearly an opportunity that it will occur and we are going to see intervals of quickly rising costs for “shitcos” however total, I believe one ought to be very cautious with these fallen Angels.
For the present Tech Favorites, I see three main points:
1.) The “Blue Ocean” interval is over. For some years, particularly all the massive firms like Google, Amazon, Microsoft,Apple, Meta and Co. may develop alongside one another with out stepping on every others toes. That is now over. Apple kicking Meta into the kneecap with privateness settings was most probably solely the beginning, extra of those conflicts are to be anticipated. To me, many areas (particularly promoting and E-Commerce) seem like Purple Oceans.
2.) Regulation will proceed to extend. With growing regulation, the previous excessive rising tech firms will look increasingly like Utilities or TelCos. Assuming that behemoths like Microsoft, Google or Apple will develop at 20% charges for a few years is unrealistic.
3.) Tech enterprise is peoples enterprise.
For a lot of tech companies, the “story” is extraordinarily vital to justify the valuation, so Administration, who’s telling the story can command excessive and generally extrem salaries. The identical goes for his or her Tech guys in addition to different vital folks like Product guys and so forth. To me, many tech enterprise look fairly simlar to funding banking companies or different folks companies the place to staff are in a position to extract nearly all of the worth creation by hook or by crook. Traders ignored this as they thought that “inventory primarily based compensation” shouldn’t be an expense, however I suppose at the very least a few of them have discovered that leason and this downside is not going to go away.
My very own focus will stay on Vitality, Vitality effectivity, Decarbonisation. Electrification and so forth. as these are very lengthy working tendencies. In addtion, I believe trying into the arduous hit sectors in Europe as an illustration within the chemical trade may make sense. As within the earlier years, I do assume it’s important to maintain an open thoughts and search for alternatives after they come up. Some monetary firms as an illustration may additionally see higher instances.
For the long run, the inrease within the threat free charge of at the very least 300 bps over the past yr has clearly elevated the anticipated long run nominal return on shares. The massive query in fact is, how persistent inflation will likely be and the way actual returns will seem like. A whole lot of market contributors appear to be tremendous excited that they may obtain constructive rates of interest going ahead, nevertheless by way of “actual returns” the scenario for fastened earnings buyers is worse then ever.
Within the mid to long run, the one safety in opposition to inflation are “actual belongings” and particularly shares in companies that may move on value will increase.
As a Ultimate goodie, beneath you’ll discover a hyperlink to a music from Jimmy Cliff that I discover fairly becoming for 2022:
The tougher they arrive, the tougher they fall, every person.
