Alokas interviews

[Sijoittaja-alokas]

94. Akee

What comes to mind when thinking of Akee? Remedy, Remedy, and Remedy. Part 1 of the Remedy thread has 617 messages, and @timontti has 1,039 messages. Akee’s pace has continued in Part 2 as well, with 92 messages out of the thread’s 754 messages. (this information was gathered while writing this intro text)

In this thread, Akee has surely been a truly important source of information for all Remedy investors and those interested in the company. He shares a diverse range of information about the company well, along with his own well-reasoned thoughts.

I have never really been into Remedy myself, partly because I don’t play video games all that much, but out of interest I do read about the company and appreciate his well-structured and properly written posts, which give everyone both information and food for thought. I’d argue that analyst @Atte_Riikola has had a lot of joy and help from this forum member.

If everyone were like Akee, moderators wouldn’t be needed. Surely he is the dream forum member in most people’s eyes, because he produces material that brings excellent added value to us investors, and it doesn’t hurt that he is also liked for his pleasant demeanor and sense of humor.

1. Describe who you are in thirty words.

I am a man who enjoys fitness, PC gaming, and “investing.” I am an ordinary Joe, but I have always been somewhat private about what I share about myself and my loved ones online, so I apologize right off the bat for keeping any identifiable details to a minimum

2. Tell three things that forum members don’t know about you.

1. I feel extremely lucky and privileged because this depressed school dropout eventually became an educated and hardworking taxpayer with the help of therapy and medication. The input-output (savings) ratio of the welfare society must have been spot on. However, I am lucky that I fell ill at a time when the availability of mental health services for young people was better than it is today. I am writing this because the shame associated with mental health challenges is real and many hesitate to seek help—including investors, who often look like they have everything together on the outside.
2. In my digital Steam game library, I have over 400 games, of which I have only played half for more than two hours. Nowadays, dreaming about gaming takes up almost more time than gaming itself.
3. Back in school, I got detention for pouring bland soup into a flower vase

Bonus fact: Back in 2017, I once tried to buy Qt for several thousand euros at around the 5.xx prices. I was an investing novice and tried to ‘fish’ for a lower price. My order fell short of execution by a few cents, the share price continued to rise, and I never became a Qt owner.

3. What interests and hobbies do you have? You are not allowed to mention anything related to investing.

In general, I am interested in science, technology, and the future.

In my free time, 2–4 times a week, I engage in fitness: bodyweight, gym, and endurance running workouts. The goal of sports is to maintain both mental and physical functioning capacity and health.

Whenever there is an opportunity and time—which unfortunately is rarely—I still enjoy PC games. I have never owned a console. My heart has always beaten for strategy games, but overall I am omnivorous when it comes to games, excluding Battle Royales, which I never got into.

4. What is a normal weekday like for you?

Perhaps a cliché answer, but I rarely have two identical days, so I can’t really answer this sensibly

5. Can you describe what kind of investor you are?

I consider myself a very return- and risk-seeking investor. I don’t believe I can (even occasionally) beat the index with my skills using a ‘regular’ diversified portfolio. I don’t believe I can follow companies closely enough to have any sort of edge over the market. I am mostly a Buy & Hold investor. When I take a company into my portfolio, my starting point is to continually look for reasons to sell it. If none arise, I continue buying.

There aren’t many companies in my portfolios, but I follow the companies I own very closely and actively. However, it must be said that although my risk tolerance has remained at the same level as when I was younger with age, my return requirement has decreased as my own standard of living has risen, and thus I have opened an Equity Savings Account (OST), the purpose of which is to gradually try to reduce risk. This is ironic in a way, because I am a minimalist, and no outsider would necessarily believe me if I claimed to enjoy a high standard of living

My biggest investment achievement is 2nd place in Inderes’ annual meme contest, narrowly losing to an overwhelming opponent, Mikael Rautanen [quote]
Here would be the INVESTMENT meme of the year vote, I chose the memes from the INVESTMENT meme thread based on like counts. fire This year is basically wrapped up already, hopefully… when looking at the portfolio. smiley 1. IMAGO, @Kale-possu [image] 2. HESULI IS SHIT, @Kale-possu [image] [image] 3. THE TRUTH @Pohjolan_Eka [image] 4. BULLSHIT FACTORY @Mikael_Rautanen [image] 5. BULLSHIT FACTORY PART 2 @Divinesia [image] 6. DIVIDENDS, HESULI’S SCOURGE, @Akee [image] 7. BULLSHIT FACTORY PART 3 @Kale-possu …
[/quote]6. Could you share what kind of investment history you have?

I was in a very privileged position when I came of age to receive a fund donation in the four-figure range. As a result, I became somewhat interested in funds at the time, but the money was mostly spent on the follies of youth. However, this served as a good introduction to investing, and even though the money was spent foolishly, receiving the fund forced me to look into investing and internalize that investing is a smart thing to do.

Later in life, when my cash flow became somewhat more regular, I started direct stock investing about 7 years stolet. I started by reading a few ‘basic works’, including Graham’s The Intelligent Investor. In the early days of my investing, I remember having a more traditional portfolio: a sensible diversification and I tried to look for ‘value companies’, even though back then the portfolio also accommodated a few growth companies.

However, I soon noticed that value investing wasn’t the right approach for me. I had always been interested in technology and pondering the future, and the valuations of the tech sector were too high for ‘value investing’. Over time, I noticed that my time, skills, or interest are not enough to follow 10 stocks, so I consciously began to increase risk by reducing diversification, aiming to invest in ‘asymmetric’ companies where I felt there was a remarkably large upside (multi-tenbagger level), but limited downside compared to, say, a company with steady, predictable growth.

Perhaps I should add that I am (nowadays) in some ways a principled investor. When I invest, I really want to understand the company, their business and strategy, and evaluate the blockers or enablers for growth and the realism of the strategy myself. Investing based solely on looking at past, present, and analysts’ future valuation multiples does not suit me. On the other hand, this makes the threshold to open a position in a new company quite high.

It is perhaps also good to state that tuition fees have been paid as well. In the early stages, I also invested in penny stocks, from which I thankfully escaped with only minor wounds. During the coronavirus bubble, I was unable to objectively examine the valuations and fundamentals of the gaming companies I owned, and I held onto my holdings and even added to them. The last 3 years in the stock market, with the main focus of the portfolio in gaming companies, has been quite a via dolorosa, and we are down over 50% from the peaks. On the other hand, I feel that this event has developed me the most as an investor, because since then I have started doing more work for my investments myself, e.g., my own analyses and data collection, and have not just relied on the views of others, e.g., analysts.

7. What kind of portfolio do you have? Which two stocks do you trust the most in the long term and why?

I have both a book-entry account (arvo-osuustili) and an equity savings account (osakesäästötili). Both accounts currently hold 5 stocks or fewer, but the goal for the equity savings account is to diversify into about 10 companies in the long term. The long-term goal for the book-entry account is to be concentrated in a small number of companies with a high return requirement and risk, while the equity savings account is meant to be a lower return requirement and risk account with higher diversification. It should also be noted that due to the high return requirement and portfolio concentration, I have genuinely internalized the possibility of very significant losses. The book-entry account only holds money that I am prepared to lose completely, which does not affect my daily life in any way. A minimalist nature certainly helps a lot.

I have focused on technology and gaming companies, but a few ‘safer’ investments have also been made along the way.

I have been a Remedy holder for 7 years already, which is also my longest-standing holding. It might not be the most objective thing to say that I trust the stock the most in the long term, but I think it is (still) one of the most interesting companies in terms of risk-reward profile in the long term within this otherwise cyclical engineering-heavy stock exchange. The reason is that the company is at a turning point where three major growth and value drivers are about to be proven (to work or not to work) in the coming years. Even at the current valuation, there is downside, but I see that the company has a cap on the downside due to the M&A card, as the company has valuable IPs and a proven ability to repeatedly create critical hits.

I cannot say I know the company very deeply yet, but I have been slowly following Aiforia. Recent customer acquisitions have been positive and likely speak to the functionality and desirability of the company’s products. So far, AI in healthcare has been utilized most in imaging. I believe pathology is the next big and natural target where AI will achieve significant time savings. It probably makes sense to take a long investment horizon (5-10 years) with the company. I cannot yet evaluate the company’s position relative to competing companies or assess the value of the IP from an M&A perspective, meaning I don’t know the market well enough yet to dare open a position myself, but I think this is an interesting long-term company.

8. Which industry/industries are you particularly interested in right now?

Gaming and technology companies have always interested me the most, and I don’t see that changing

9. What is your stock-picking process step by step?

I cannot say I am particularly systematic in this. I don’t especially ‘search’ for new investment targets, but due to news, Inderes, or personal interest, interesting companies occasionally cross my path, and I start following what they do. I try to invest in thorough DD. I am not a numbers wizard. Of course, I look at valuation metrics in the big picture, but what is more important to me is trying to understand the company’s business, products/services, strategy, and market, and especially future prospects and the factors influencing them and the drivers of growth.Since time is limited and I want to get to know a company thoroughly, this has often led to a situation where a positive event or news happens to a company I follow, the share price and valuation rise, I feel that a good investment opportunity slipped through my fingers, and I end up not investing. This is still a major blind spot for me, which requires a lot of conscious work so that I can learn to buy a good company on good news \n\n10. What are your three greatest strengths as an investor? What is your biggest area for improvement?\n\nStrengths\n\n1. Sticking to the investment plan, even though my investment plan might deviate from the norm in terms of concentration and risk-taking.\n2. Tolerance for risk and volatility. Without this, point 1 would not be possible.\n3. I seek and want feedback/criticism for my own thoughts, which is a significant reason for writing on Inderes.\n\nAreas for improvement:\n\n* I make buy or non-investment decisions too emotionally.\n* I want to develop my skills in valuation, e.g., DCF.\n* I want to learn to interpret financial statements and their nuances more deeply.\n\n11. What makes you mostly write “only” in the Remedy thread? \n\n

\n\nThere are probably two reasons for this.\n\n1. I ‘hobbiesque’ follow the gaming industry and am personally interested in the industry, and I could discuss the gaming industry even if I had no investments in it at all.\n2. I consider myself generally a cautious writer, and I have the mentality that if I write, I try to add value whether in the form of argumentation, reflection, or a meme. I do follow other companies, but I have a high threshold to write or participate in discussion if I’m not sure whether I can add value to the discussion.\n\nRemedy combines these two things - I understand and am interested in the gaming industry and companies enough that I am reasonably sure my writings can add value or spark thoughts.\n\n12. Tell your thoughts on Remedy in under 200 words?\n\nA domestic gaming company with an enterprise value of approx. €200M, which owns two well-known IPs (Alan Wake, Control) with publishing rights, as well as its own graphically and technologically impressive game engine, ‘Northlight’.\n\nIn my opinion, the company has three interesting value/growth drivers worth following.\n\n1. Multi-project model: Games released annually or nearly annually limit risk, improve predictability, and increase cash flow.\n2. From game developer to game publisher: A bigger slice of the pie is kept for oneself.\n3. ‘Remedy Connected Universe’: A connected game world supports the cross-selling of other games.\n\nHowever, in my opinion, Remedy has not yet convincingly proven the success of a single driver and is likely an extremely high-risk investment. Nevertheless, I think the return potential is considerable if even two out of the three value drivers materialize.\n\n13. How do you follow Remedy? How do you generally follow the gaming industry?\n\nFollowing Remedy:\n* I check and excelfile (almost) daily the sales positions of Remedy’s games and peers on various sales platforms. I could automate this, but I’ve found it meaningful to do with my morning coffee.\n* I have made an excel template with which I estimate the current and future development fee and royalty stream of all the company’s projects. Over time, I have fine-tuned the excel. I can easily change assumptions in variables such as game project timings, sales, publishing agreement terms, live-service revenues, etc. I have made my own bear, neutral, and bull scenarios, from which I try to scope out my view of the future scenario scale and ‘fair value’. With this, I can quickly make my own analyses and conclusions from new news and events around the company.\n* I always read Inderes’ analyses, aiming to understand what changes have been made to the forecasts and on what grounds. I check my own assumptions and excel against this and decide whether I agree or disagree with the analyst. Especially in gaming companies, I think Inderes’ analyses are excellent because they open up the rationale behind their own forecasts. With some competing analysis providers, you just get to stare at the financial ratios table without the slightest clue of what the assumptions are based on. Such analyses are almost worthless in the case of gaming companies.\n* The basics like annual reports and financial statements I read through, of course. In addition, both public and private discussions with other Remedy investors, followers, and bulls on Inderes and elsewhere. These have been a tremendous help in developing my own thinking.\n* I usually listen to Inderes’ interviews and webcasts multiple times (usually while jogging). On several occasions, I have been able to make interesting conclusions from many small things and details. In a company like Remedy, where information comes sparingly and tacitly, these have been invaluable, because without them, there wouldn’t be the traditional tongue-in-cheek CEO facial expression analyses either \n\n[quote]\nBelow is high-quality analysis done on an extremely tight schedule again. [image] Tero taking a deep breath before stating that it was a strong quarter for us. [image] When discussing Vanguard, Tero’s subconscious takes him to his own stock portfolio as his gaze wanders to InderesTV’s Youtube recommendations. Tero momentarily ponders where the cash from the upcoming buyout should be invested. [image] Tero tells us not to forget that the goal is to build high-quality games [image] A little mischief…\n[/quote]Gaming industry tracking:

I have an Excel sheet with specific gaming companies, their key figures, and analyst forecasts. Some of these act as comparables for Remedy, some do not. I track some with a potential buying opportunity in mind. I have also “excelled” corporate transactions and their valuations, development and marketing budgets for various game projects, public publishing agreement templates, etc.

Generally speaking, however, tracking the gaming market is not as systematic as tracking the gaming company I own. I read both gaming media and media focused on the gaming market, and I follow gaming analysts on social media. In practice, however, gaming news and analyses cross my path daily.

14. If you don’t play games at all, is it even sensible to consider this company as an investment target?

Perhaps I’ll answer this by saying that when I first invested in Remedy, I knew almost nothing about the gaming market. I was interested in Remedy because of the games they developed. Thanks to Inderes’ extensive report, I learned about the gaming market and the company’s positioning within it. Only after this did I make my first investment, and over time I tried to understand the company and the market more broadly than just through analyst reports.

My hobby of gaming mostly just meant that I knew the company’s name beforehand, which guided me to get to know the company after its listing.

15. If you have to estimate in a hundred words, what do you think will be going on with the company in 2029?

But here is a bullish hypothetical scenario that will likely not hold true anywhere near the future

The company has not fully succeeded with the multi-project model, and thus some synergies remain unrealized. High quality standards also delay some games. However, the company has taken a big leap in improving its position in the value chain, and thanks to 1–2 commercial hits, the company will self-fund and publish 1–2 upcoming AAA games.

The company has negotiated the Quantum Break rights from Microsoft for itself and is rebooting the game series, which will be the next new IP. The original will be ported to Playstation in the meantime through outsourcing.

The company’s major owners are considering or have considered selling the company in a situation where the Alan Wake and Control game series have been milked for a few expansions, but the future of the gaming industry is uncertain, and releasing a new IP feels like a big risk.

16. What do you get from the Inderes Forum that you can’t get anywhere else? What are the most important materials offered by Inderes for you?

The Inderes Forum is the most active, best-moderated, and highest-quality forum I know. Other writers on the forum, as a single shoutout, for example, @Pohjolan_Eka. Even though the bear is currently hibernating in the Remedy thread, his bear cases have helped challenge my own thoughts both in the Remedy thread and in company threads that I don’t write in myself but follow.

The most important other Inderes material is probably the analysts’ company analyses. I also consume Inderes’ video material, especially interviews and roasts, but also Verneri’s quarter from time to time.

17. Why do you invest? What concrete good has investing brought to your life?

I can’t really say that investing has (yet) brought concrete good. A nice hobby and pastime that fits well with my own interests, and which hopefully won’t turn out to be too expensive.

My secret dream is that one day the value of my portfolio would be so significant that I could transition from my current activities to, say, working in the gaming industry (:D) or studying something else interesting.

18. What games are you playing right now?

My three most recent games are:

Fallout 4: Inspired by Amazon’s TV series, I started a new character and game run. I don’t think I’ve played a single Bethesda game through to the end, except for Fallout 3. There is always too much to do in these, and I always get sidetracked until my interest runs out.

Baldur’s Gate 3: An eternity project I haven’t played through it yet, but hopefully I’ll finish it this year!

Alan Wake 2: Night Springs (DLC): It’s wonderful to get a bounded 2–3 hour story after its two-person predecessor. As both an investor and a player, I thought this was a good performance. The pervasive reuse of assets was compensated for by a unique narrative and humor.

19. How should Alokas start familiarizing himself with gaming industry companies?

By reading Inderes’ analyses and extensive reports on the gaming companies under coverage.

Alternatively, Alokas can start playing the game Big Rigs and pretend he’s driving a hydrogen semi-truck

Big Rigs Over the Road Racing Gameplay and Commentary

20. Who do you especially want to thank the forum members for?

Special thanks to the moderators who help keep the forum high quality, and to the active commenters maintaining high-quality discussion threads who make me read the Inderes forum daily

---

Thanks Akee for the good and well-written answers!

You have to appreciate a forum member who has been here actively since 2018 and has never caused hard feelings for others, and instead has been a nice guy equipped with meme artist skills. The most important thing for the Forum, however, is that he has put a lot of effort and his own time into writing high-quality, content-rich investment-related posts. No provocation, no gut-feeling claims, etc. For my part, I could take a lot of cues from him, especially when it comes to writing good justifications.

If you put time and effort into writing posts and remember the rules of behavior taught in kindergarten, you are usually able to provide other investors with useful thoughts and information.

Thanks to everyone sharing interviews, likers, and readers!