Having looked into Loudspring today, my analysis of this play didn’t get off to a very strong start.
“We believe the company deserves a 20% investment company premium due to its strong track record and diversified portfolio, and our target price for the share is 1.05 euros.” -Inderes
One month after initiation, and the premium has already been sliced away. 
Suomen Kuvalehti (a Finnish weekly magazine) has a much stronger track record in sniffing out these plays than Inderes. 
Did you read the report yourself? I believe it provided valuable insights into understanding the company as an investment, even though we did not see a crisis escalate in one of the holdings. The media focuses on one company, we look at the big picture.
If one looks closely at the valuation, the “investment company premium” does not even offset the negative value given to the present value of the company’s group expenses in the analysis. In other words, a slightly negative value was already given to the added value of the company’s management/administration relative to expenses in the original outcome. This could have been explained better on our part.
You can’t think of it that way. If a premium is allowed, then management/administration must generate added value after costs, which is equal to the premium.
Martela, Innofactor, Verkkokauppa.com, Restamax. How will this series continue?
We can also add Efecte, which isn’t exactly a flop, but hasn’t done very well. F-secure’s recommendations have gone completely wrong. Siili has also been hyped (though not recently) and it has also gone down quite a bit.
Inderes’ team hasn’t been very strong lately. These kinds of growth companies grow rapidly in a bull market, but in a different situation, they also come down rapidly.
What do others think about these recent recommendations? 
The model portfolio hasn’t been tested in proper long-term bear markets either. The portfolio’s structure doesn’t look very rosy for a bear market.
Your contributions to this forum are very well summarized in this message. You seem to need to nitpick almost everyone else’s every investment and idea, while at the same time you haven’t seemed to mention at all what you yourself own, if anything?
It’s not that I disagree with your points; you just have an attitude toward this whole thing that is completely foreign to me. It’s not realism, but schadenfreude.
Efecte certainly does not belong in the failures category. Inderes
Looks at the case in question with a 5-year outlook, not just one quarter, unlike @g3235286 and most investors. Similarly, Restamax seems to have been quite profitable when looking back even a couple of years.
Edit: Additionally, it is good to distinguish short-term price fluctuations from the true value of the business and the fundamentals affecting valuation.
Can you say that the market was absolutely right about Efecte when SaaS grows “over 18%” but the stock dipped 8%?
It’s not about the primary purpose being to criticize in any way. It’s mainly about everyone here seeming to live in a state of euphoria and believing that the market still has a lot of room for real growth. I’m mainly happy about the market going down, not about others being wrong. Here, too, most people seem to just follow Inderes, and criticism of recommendations is seen as wrong. I am indeed happy if the markets could gain some sense and valuations returned to appropriate levels. I am not happy about anyone’s personal failure.
If this was partly referring to the F-secure thread, I just found it amusing that first there’s hype and buying, and then the day before the profit warning, they sell for a price slightly higher than the acquisition cost.
Similarly, I’ve been wrong with my high cash weighting for several years. Because of this, frustration can sometimes get the better of me.
At the moment, I consider most companies expensive, but I fear that central banks’ monetary policy will prevent declines.
I also own some of the companies about which I have expressed critical views. This is largely because they do have potential, but it just hasn’t materialized yet. Especially if this upward trend continues. They are, in a way, insurance against my desired decline not happening
These two numbers cannot be directly compared as such. Efecte relies purely on growth that must extend many years into the future. For this reason, a seemingly small reduction in growth is cumulatively quite significant, so I consider the decline to be fully justified.
Inderes looks a year ahead, and F-Secure is a recent example of this. Because valuations in the cybersecurity market are astronomical, similar valuation levels are allowed for F-Secure. Target prices have nothing to do with long-term value. No one probably expects that valuation levels will remain very high for years.
Even during the tech bubble, Inderes’ target prices would have been astronomical, because valuation is performed by comparing it to other similar companies and their valuations. Recommendation prices do not necessarily say anything about long-term opportunities. If an analyst believes the bubble will last more than a year, the target price is given according to the bubble.
It’s good that someone is offering criticism. Having followed the forum, it feels like Inderes is trusted more than God. I see the problem as Inderes (and sell-side analysts in general) being too optimistic and uncritically swallowing all the targets painted by CEOs. In real life, things don’t always go as planned. There are negative surprises and other disappointments. In all companies, projects and plans sometimes go wrong; there’s nothing unusual about that.
Example: Inderes’ report on Siili before the negative profit warning stated: “Siili has shown stable growth and a 9-10% EBITDA margin consistently for 6 consecutive years. In 2018, the company will continue on the same path, and we value the predictability of its earnings.”
So the analyst wrote as certain fact that profitability would remain at the same level as before. The valuation was based on this assumption, and as a result, the target price was 12.50 euros. Then came the surprise. If risks are not priced in at all, an investor relying on Inderes is more likely to be disappointed than to prosper.
Inderes’ target prices have required strong earnings growth in many companies. These include, or at least included, Pihlajalinna, Verkkokauppa, Talenom, Fellow Finance, Efecte, F-Secure, Restamax, Loudspring, and almost all IT service companies. The target price might be okay if everything succeeds. If not, there will be a big collapse. This has happened with many cases.
I agree with @g3235286, that stocks are still expensive. I don’t hope for a collapse, but I wouldn’t invest in a stock whose price only bakes in success.
Good message TeeMa!
That’s how it is. The bottom line of a stock’s value is the discounted present value of future cash flows. That’s something that helps keep market fluctuations in perspective. If you want to double your money with gambling, a good investment seems to be small, low-volume companies whose price formation is in the hands of a single analyst and whose business model allows for scalable growth. I must admit that I don’t understand anything about growth investing, so I wrote a thread about it. It’s a shame no one has picked up on it.
Tech companies are indeed highly valued. Some of them, like Nixu, have cleverly taken advantage of the stock market situation by issuing new shares. The share capital diluted by 13.6%, but equity grew by over 140% in 2017. That’s a good basis for seeking growth.
Lehto was a relatively bad failure with the buy recommendation. Let’s see what kind of company update comes on Monday. Was Friday an overreaction or a realistic reaction…
I don’t feel like my investments have gone wrong.
As for calculations, I can calculate the simplest key figures and other things using a basic model. However, I have found that delving into the industry, various qualitative factors, etc., are difficult for me to incorporate into my own quantitative analysis. I have outsourced this activity to Inderes, because in my opinion, their analysis is the most in-depth in Finland. My investment horizon is about 30 years, so I can calmly wait until the next trading day (counting in terms of one overnight trading day).
I also draw inspiration from quantum physics to create abstract dispositions and thus achieve a great consensus with abnormals. 
This whole thing reminds me a bit of a certain “Stock Emperor” and his strange ramblings, mostly about Loudspring.
Something smells a bit fishy here…
If this whole thing turns into a calculation, then most of Inderes’ estimates will be redone, but they are mostly built on a growth scenario where the economy continues to grow and there is an eternal summer in the world, unless some company manages to mess up its own affairs.
P.S. It’s a bit difficult to see that you would have familiarized yourself with many other analyses besides Inderes’, as they tend to be paid, and private investors rarely have the same kind of money as, for example, institutions, so there is practically no basis for comparison.
You seem to be such a guru that you make investing look easy. I would ask you, @evolove173, to post your understanding of Lehto Group’s fair value in this thread before Monday, so we can openly compare your view with analysts, among others. Then, in the future, we will also see who is closest to the “truth.” The sample size here is quite small (only one interim report), but that makes it all the more interesting.
I have nothing else to discuss about this.
Edit: This Inderes forum seems to be increasingly taking on the characteristics of the KL discussion board in all its negativity. Hopefully, we can maintain a positive vibe here… often these Facebooks, KL boards, etc., turn into comparing portfolio sizes and negating others.
Criticism is definitely a good thing, and it should be expressed when there’s a reason. Inderes didn’t have the smoothest week last week, and that didn’t go unnoticed at the office either
However, let’s keep the discussion respectful and constructive towards each other: the forum is for all of us to develop as investors and to encourage each other in that journey. There’s good discussion here, and I’d say it hasn’t been over-the-top, but let’s stay within the bounds of good taste. Investing is an awkward discipline in that one should practically constantly question one’s own and others’ assumptions, and instead of asking what we know, ask what we don’t know ;D But let’s do it with positive spirits towards each other.
Here, you can directly challenge analysts and their forecasts if you doubt their accuracy or if you suspect an analyst is “guilty” of over-optimism (or excessive caution…). If you don’t get a direct answer from an analyst, ping me, and I’ll go remind them that clarification is needed (note: they have a lot of work, so answers don’t always come immediately).
Forecasting is really difficult, especially forecasting a downturn in the general economic growth picture. That’s why it’s crucial for investors to read what the forecasts are based on, and not just take them as given. A great many cases are currently relying on the realization of growth forecasts, so be prepared It’s a common human trait for us to be slightly over-optimistic, and the tendency to extrapolate applies to all of us.
All in all, good discussion. By the way, there will be significantly more of these missteps in the future: there are already over 100 companies under company coverage, and it would be sheer impossible for analysts to be right about everything (I would suspect insider information or something else then!). If we assume that, say, 10% of cases go completely awry during the year, then investors will get to lambaste the recommendations for 10 companies thoroughly. At the same time, of course, 20 cases might succeed, but those, of course, cannot be highlighted in this thread (see thread start). The point is that unless Inderes starts getting every other recommendation completely wrong, the entire research work should not be condemned based on ~10 cases. Or, for now, there are currently fewer (if we count Martela, Innofactor, and Verkkis where things have really gone south in the last year, I’d say, for example, Enersense, Loudspring, Lehto, and Efecte are still awaiting their judgment).
Friday’s close is quite good, and it has just enough bad news inside, as analysts will probably still see something good coming and add a euro or two on top of that for their target. I would also have a sell recommendation, so I wouldn’t start shoveling that in this situation. Let’s look again in a couple of years.
Cute, if a positive vibe means that the bullshit detector must be turned off and all the BS believed, without any evidence.
How long does a stock have to tank, Verneri, before we can say the analysis was wrong? Most of them rise eventually, but what is the timeframe for the analysis and the stock’s correct direction, within which the stock must move according to the target price and recommendation, or the analysis was wrong in your opinion?
A sell recommendation without fair value? Simple question: HOW MUCH?
Then I should believe your “bullshit detector” sell recommendation?
I didn’t mean that, the bullshit detector should always be on. I meant that criticism should be constructive. You can also present your own views as a counterpoint and justify them.
There is no simple answer to this. I would consider the case to have gone awry if the original theses are not realized within the assumed time + half - 1 year on top of that, and the stock has also taken a good beating. In principle, a case can go awry, but if the margin of safety is in order, you can get away with it unscathed. But this is hard to say: consider Loudspring, for example. The stock has taken a hit, and for good reason, but on the other hand, if one of the businesses were to take off surprisingly strong, the current dip could be filled quite quickly.
The target price is set for one year ahead. However, the analysis can be said to be wrong if the company does not develop in the direction of the analysis in the shorter term. I could already argue now that, for example, Lehto’s analysis was wrong. The accuracy of the analysis cannot be assessed solely on the basis of stock price development, but the target price can. In this regard, it must also be noted that if some significant unexpected change occurs in the business environment, it alone does not undermine the quality of the analysis, even if the scenario according to the analysis does not happen.
Addition: Now that Lehto was taken as an example, I must still state that if the several tens of percent reduction in Lehto’s operating profit target in Friday’s negative profit warning is due to general poor development, then in this case the analysis is wrong. If, on the other hand, there is some individual failure in the company behind it (this would certainly have been stated in the negative profit warning release), then the analysis is not necessarily wrong.