Summary

Ferd Invest - 2009 summarized

Ferd Invest operates as a financial investor in companies that we believe offer unique qualities. We aim to maintain a long-term ownership interest in such companies, subject to the pricing remaining attractive. Our objective is to generate a higher return than investors generally achieve in the stock markets in which we invest.

Ferd Invest aims to invest in companies with unique products, better than average profit margins and management that prioritises long-term value creation. We believe that by focusing on a limited number of good companies we will achieve a better return than the stock market as a whole in the countries where we invest. Ferd Invest currently invests in Norway, Sweden, Denmark and Finland. Ferd Invest will be close to fully invested at all times, and neither gears the portfolio with borrowing, nor sells shares it does not own (short selling).

MAIN FEATURES OF 2009

  • A strong year for stock markets, particularly for the Oslo stock exchange
  • Ferd Invest outperformed its benchmark index
  • We have aggregated our portfolios to a single Nordic portfolio from 1 January 2010
  • Cautiously optimistic view of prospects for stock markets in 2010

MARKETS
2009 was a very good year for stock markets. The pessimism and fear that characterised the start of the year was quickly replaced by a much more optimistic view of future prospects, and most stock markets rallied strongly. The Oslo stock exchange was a particularly strong performer, with a hefty 64.8% upturn in 2009. A sharp rise in oil prices in response to clear signs of improvement in the global economy was a major factor in the performance of the Oslo market. 2009 was also characterised by the proliferation of economic policy packages initiated by the authorities in almost all countries.

INVESTMENT RETURN
The market value of Ferd Invest’s total portfolio gained 59% in 2009, almost 5% better than our benchmark index.

The market value of the Norwegian segment of the portfolio gained 64%, which was approximately in line with the Norwegian benchmark index. The best-performing holdings in our Norwegian portfolio were Acergy, PGS, Tandberg and Yara.

The market value of the Swedish segment of the portfolio gained 26% last year, while the Swedish benchmark index rose by 31%. The best-performing holdings in our Swedish portfolio were Modern Times Group, Sandvik, Volvo and SKF. Our weakest investments in Sweden were AstraZeneca, ABB and Ericsson, and these holdings are the main reason for the Swedish portfolio underperforming its benchmark index in 2009.

Our Nordic SME portfolio gained 81% in 2009. Our benchmark index, the Carnegie Nordic Small Cap Index, rose by 45% in the same period. Our investments in Eltek, KappAhl, Det Norske Oljeselskap and Photocure all performed significantly better than the index, and these holdings account for the major part of the portfolio's strong performance relative to the benchmark.

Investments have so far been allocated to three separate portfolios which are monitored against separate benchmark indices. Despite this, we have operated with a unified strategy for these investments. Towards the end of 2008 we increased the overall risk exposure significantly, and much of this took place through the SME portfolio. Accordingly, when evaluating the risk and return achieved over the longer term it is more relevant to consider the overall return from these investments rather than the returns of the individual portfolios in isolation.

Over the last three years, the overall portfolio has significantly outperformed our benchmark indices. We have outperformed the market both in rising markets (2007 and 2009) and in falling markets (2008). NOK 100 invested in the market at the close of 2007 would now be worth NOK 82, whereas NOK 100 invested in our portfolio over the same period would have been worth NOK 109 at the close of 2009.

PORTFOLIO ALLOCATION
At the end of 2009, Ferd Invest held around 60% of its total portfolio in Norway, 18% in Sweden and 22% in the SME portfolio. This allocation was very close to the benchmark index allocation. The rate of turnover in the portfolio remained moderate. With effect from the start of 2010, the three portfolios have been combined into a single Nordic portfolio. The benchmark index for the combined portfolio is the VINX Benchmark Cap Index, Net Total Return (in NOK).

ORGANISATION
There were no changes to the Ferd Invest team in 2009.

FUTURE PROSPECTS
In view of the very strong stock market performance seen 2009, it is tempting to be a little less optimistic about the market looking forward. There are significantly fewer clouds on the horizon at the start of the new decade than was the case a year ago. Our experience suggests that the market may carry on rising for as long as investors have enough to worry about. We have a cautiously optimistic view of the outlook for the stock market in 2010, but we doubt that the market will produce the same scale of returns that we saw in 2009.

 

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