In 2020 I’ll publish montly reports of my portfolio, instead of the monthly dividend income update as last year. For the first month of 2020 there has been several changes, and some of them I have to admit was mistakes. But, I’ll learn from these mistakes and I do stand by my decisions.
The portfolio gained 1.8 % in January 2020 and lagged the benchmark index which gained 3.59 % (VINX Benchmark Net Index NOK). Nevertheless, the past years I’m way ahead of the benchmark and trust that the portfolio will bounce back.
Dividends in January:
The dividends in January was paid out by Transalta Renewables and Brookfield Renewable Partners (I use payment date in my records, and not ex. div date). Total dividends received was NOK 535, up from NOK 146 last year. Last year I only received dividend from Eolus Vind, which was sold in mid-January this year.
January turned out to be a very active month. A total of 8 transactions was made, and I’ll shortly go through them below.
Valmet Corporation – out of the woods – (write up)
Summary: I find the current share price to be too conservative for this quality company and expect that the return in the coming year will come from multiples expansion (from PE 16.6 to 18), dividend of 3.5% (EUR 0.75 / 21 EUR per share) and future earnings growth (5 year historic earnings growth of CAGR 33%).
Chr. Hansen Holding A/S is an excellent defensive stock, with a convincing, recession-resistant portfolio. The company operates within food cultures, enzymes, natural colors, plant and animal health and probiotics. High return on invested capital, nice free cash flow yield and high entry barriers was main reasons for investing in this company.
Novo Nordisk is a global pharmaceutical company that is a market leader in the treatment of diabetes. It has strong positions in haemorrhage, obesity treatment, growth hormone therapy and women’s health. Novo Nordisk has a broad and innovative product portfolio and benefits from economies of scale related to the development, production and sale of diabetes products.
So, over to the mistakes; my sell decisions. In hindsight the decision to sell Eolus Vind AB and Scatec Solar proved to be bad decision. I sold both companies prior to their quarterly reports. They have greatly outperformed the market subsequent to my exit and left me baffled over their share price performance. I sold my position in Scatec Solar since, in my opinion, the risk in their project pipeline has increased (emerging markets e.g. Vietnam) and that the risk / reward in the company was low. Eolus on the other hand disappointed me in their reporting in Q4 (23 October 2019) with no extraordinary dividend, low project backlog visibility and cost overruns on latest projects delivered. Conclusion: I missinterpreted the amount of fund inflow to companies with exposure to renewable-companies.
NIBE Industrier AB on the other hand proved to be a better sell decision. The company was bought in October for 120 SEK per share and since then the share price development was straight upwards, and I sold at 175 SEK per share to make place for Valmet Corporation and Chr Hansen.
The focus in February will be on the quarterly reports for my remaining holdings which did not report in January. I love this time of the year as most dividend hikes and payments are announced in this period.