Good start in 2018 for Ferd Invest
“The share prices of the majority of companies in which we have invested have gone up, and we have not experienced any dramatic falls so far this year. We have achieved a return of 5%, which is 5% better than the market”, comments Lars Christian Tvedt, Director of Ferd Invest, in an interview with Ferd Magazine.
Norwegian the biggest winner
The biggest increase has been Norwegian Air Shuttle, with shares in the carrier having climbed by more than 50%. And this has made a significant contribution, as Norwegian is easily the largest single investment in Ferd Invest’s portfolio. It is of course primarily the takeover approaches that have driven its share price higher, but Lars Christian believes in the share’s long-term potential, even if the takeover attempts do not succeed this time.
“A significant amount of strategic value has been created at the company, and in our view considerably more than was reflected in the share price before the takeover rumours started. This should pay off over time whatever happens”, he comments.
A weak 2017
It is particularly pleasing for Ferd Invest that shares in Norwegian have risen to the extent they have, as this was the company that cost the business area the most in 2017. Indeed, Norwegian was the biggest single reason for the business area only generating a return of 6.2% in 2017, as compared to the 18.6% return achieved by the benchmark index that Ferd Invest is tasked with outperforming. Norwegian was, however, not the only reason for this. Both Lars Christian Tvedt and Junior Portfolio Manager Nicolay Mylén emphasise that generally good growth in the economy and interest rates remaining low contributed to a lot of money flooding into the equity markets, with this pushing share prices up further in general. In addition, certain sectors saw their valuation multiples increase, while the fall in the Norwegian and Swedish currencies and the trend for exchange-traded funds and passively managed sector-specific funds also contributed to the market in general generating a better return than Ferd Invest’s portfolio.
Picking specific undervalued shares
“These conditions do not suit Ferd Invest’s strategy, which is to pick specific undervalued shares. Industry-specific and general market trends are something we only invest in exceptionally”, comments Nicolay Mylén.
“With that said, however, I won’t hide from the fact that we also missed the mark quite considerably on rather too many of our investments. We are not very pleased about this”, adds Lars Christian Tvedt.