I googled more and it seems Norvestia’s owners received a 23.2% premium.
Thank you, Warren_Fyffet, for the valuable additional information. I’ll have to investigate further. It seems like an interesting buy next autumn when prices are at their lowest.
Hey, Investor is probably not for sale, but investment companies have been delisted from the stock exchange. Melker Schorling AB, an investment company on the Stockholm Stock Exchange’s large-cap list, was bought out by the Melker Schörling family in 2018. The Wallenbergs are unlikely to act this way.
On the Stockholm Stock Exchange, the investment companies on the large-cap list (Investor, Industrivärden, Kinnevik, Latour, and Ratos) are very different in terms of valuation, management fees, and investment philosophy. It’s a bit difficult to clarify these or compare the companies’ management fees. In these investment companies, the largest owner is usually a local wealthy family. Latour’s main owner is Gustaf Douglas, Ratos is controlled by the Söderberg family, and Investor is controlled by the Wallenbergs. A small investor could choose the portfolio manager they consider best.
Investor’s good points are that the company’s investments are very clearly laid out on its website. Investor is also a long-term developer in the companies it owns. Investor is actively involved in corporate arrangements within its portfolio companies. One way to create value has been to split companies in two. For example, in 2018, Epiroc was formed from Atlas Copco’s mining and excavation division. This year, Electrolux was split into two, forming Electrolux Professional. Unlisted companies have also been listed on the stock exchange. In 2019, EQT was listed on the Stockholm Stock Exchange, and now there’s speculation about Mölnlycke’s listing. This is partly how they have created outperformance compared to the index.
There might have been another, less dramatic reason for postponing the dividends. Even a financially sound local cooperative bank stated in its message regarding profit shares equivalent to dividends:
In accordance with the recommendations of the European Central Bank (ECB) and the Financial Supervisory Authority, we must postpone the payment of profit distribution by cooperative banks, i.e., the payment of 2019 interest on profit shares. The payment of interest will be postponed from next June to October 2020.
At OP Group, we want to follow the recommendation and thus bear our responsibility as Finland’s largest financial group. With this recommendation, the ECB and the Financial Supervisory Authority aim to ensure banks’ ability to support the real economy with corporate and household financing to alleviate the impact of the economic crisis caused by the coronavirus pandemic."
This is not a statement on whether or not there are skeletons in SEB’s closet.
What exactly did that reference to Investor mean?
The reference to Investor meant that when push comes to shove, Investor stands behind SEB as a financier. Not all banks have an actor behind them who, if necessary, provides funds to get through the worst.
As an example, Ålandsbanken bought Kaupthing Sverige during the financial crisis. When a tough situation arises in the banking sector, interesting situations emerge; things don’t always go as one expects.
We’re here!
Q1 presentation still online for a bit:
https://edge.media-server.com/mmc/p/j36r6rnr
Sorry I forgot to post the link yesterday. It slipped my mind.
Q1 report in English:
It went well: value only decreased by -10%.
Stock exchange operator Nasdaq raised its dividend by 4%, and Investor is a major shareholder in Nasdaq with an 11.8% stake.
I have to answer myself, as I don’t want to over-burden Warren_Fyffet, a username I greatly respect, as an overly enthusiastic student. Thank you very much for the IBI link above. I only just now got around to examining it more closely.
What an incredible website! It conveniently provides the calculated intrinsic value of holdings from time to time. When I used to check these, I had to calculate it myself with Excel – that was at the turn of the millennium.
But now, it also offers nearly real-time intrinsic value of holdings calculated per share, and even a discount table between intrinsic value and market value for different periods. And all of this almost in real-time without Excel. Nice and easy!
The relative valuation change table (+/- 2%) information seems a bit too clever, but probably necessary for those who trade. And just as necessary for us “roughly-in-the-right-direction investors” as a sextant or regional declination charts are for modern sailors.
IBI’s biggest problem is that it takes away all interest in following developments on a quarterly basis. If everyone else already knows the values, nothing comes as a surprise.
Oh, those were the days when four times a year you could take a day off to play around with Nokia as a day trade. Always such fun playing for the sheer joy of it. If you made a few hundred or a thousand, great. If it occasionally went wrong, the long-term portfolio strategy was always there to save you.
My comment on the actual topic can be summarized by saying that Investor seems like a sufficiently, and in many people’s opinion, a bit too broadly diversified portfolio, where large company-specific gains melt into the larger mass, but so do large losses. If someone is thinking of investing in a lucky duck ETF, Investor is, at least based on historical returns, a much better option.
Investor, on the other hand, is not suitable for those for whom dividends (with Investor, a percentage starting with 3) are important. Investor is more interested in increasing the amount of assets than in securing holiday money. For obvious reasons, as the ownership list tells us.
For my part, Investor AB is definitely in the dividend investment category. The company has usually increased its dividend by one SEK per share every spring. If you visit Investor’s website and read about Investor and its targets, objective number 3 is to pay a growing dividend.
Operating Priorities are, of course, first to grow asset value, then operate efficiently, and then pay a growing dividend.
The company caught my attention when I was sifting through what I considered good quality companies, and it seemed to be behind quite a few of them. When I started looking closer, I realized that I actually wanted to own almost all of the companies it owned, and then those I didn’t own started to interest me. I couldn’t even buy all of them. Then I started calculating that, based on the substance, I should sell my holdings and buy Investor. At the same time, I get the company’s contribution to developing the company, and there are situations in the stock market from time to time where it’s better to act as a major shareholder than a minor one. I read the company’s histories, and the Wallenberg family is familiar, or I’ve encountered them through my working life. I have confidence that they know their business and stand their ground. Someone once calculated the company’s “management fee,” i.e., the costs incurred by the company for the portfolio, and it is also very competitive compared to funds. It has everything a good fund requires. A long track record of good investment activities, and the managers have their own money at stake, and a lot of it. In addition, this company has the advantage that it doesn’t have to adjust its portfolio due to rules or pay out money at an unfavorable time.
Similar companies can certainly be found among other investment companies, but if we compare it to Norvestia, for example, it doesn’t have a track record of 100 years of investment success. I recommend going to Investor’s website, to “About Investor,” and reading the sections “Business model,” “How we do it,” “Targets and outcome,” and “History.”
Its operations are characterized by a pursuit of the best. The best business, the best people. Compare that to Finnish companies, co-determination negotiations here, co-determination negotiations there. If you look at the best during this earnings season, they have been KONE and Elisa. Have these companies had co-determination negotiations?
I have read studies that compare the success of corporate acquisitions, the success of investments, and investing in people in the business world. In the long run, by far the best investment is people. For example, if you buy a best-in-class bus for a bus company now, it will be old in five years and will have required annual maintenance. If you take a top student from a top university, they will be a better employee in five years than when they started. This is easily understandable, and furthermore, a top performer can generate returns for 20 more years, unless things are messed up and they leave or are laid off.
Those are my thoughts on Investor. I consider it a top company and would add that it’s quite difficult for such a company to go bankrupt as long as debt remains under control. Assets can always be realized relatively easily, and share issues can be held if necessary.
You can invest in Swedish investment companies with a small amount of money through Spiltan Aktiefond Investmentbolag. For the global market, with Global Investmentbolag. There may be other companies like Investor. Personally, I’ve had difficulty finding the same combination of substance discount and company quality as in Investor elsewhere. In Finland, I don’t believe there are comparable companies. Nalle Wahlroos seemed to lament their absence somewhere. We’ll see if Taaler or CapMan ever develop into such companies.
I noticed the same thing. The dividend has steadily risen by one krona per year since at least 2016’s 10 kronor. In a zero-interest rate world, a dividend under 4% is, of course, good, but many Finnish companies have a better dividend history for dividend hawks. I don’t particularly value “cake eaters” (those who prefer dividends), but I myself belong to the “cake savers” clan (those who prefer reinvestment). It’s better for a productive company to grow than to be bled dry – if a cheap oversimplification is allowed.
Investor distributes a consistent small return and doesn’t tie its dividend to earnings, like many Finnish companies do. In 2018, earnings per share were negative, but the dividend still increased by one krona to 12 SEK, as usual. Conversely, in 2019, earnings per share were 132 kronor, but the dividend was still only 13 SEK. In this sense, the comparison I used in my previous message is misleading. It is precisely the boringly consistent, relatively low dividend yield year after year that assures the money for that summer holiday trip will surely come, no matter what happens in the Swedish economy.
You don’t even have to calculate it, as it’s stated in the Q1 interim report:
“Management cost
Investor’s management cost amounted to SEK 128m during the first quarter 2020 (123). As of March 31, 2020, rolling 4 quarters management cost amounted to 0.12 percent of the adjusted net asset value.”
That’s a challenge for funds.
This week, I became an owner of Investor AB for the first time. Hopefully, this will be the start of a beautiful and long story. 
Nordean today’s rating is Buy, with a target price of SEK 578:
Investment case
Investor represents an appealing opportunity to buy into attractive exposure,
both in its listed and unlisted portfolio
os, at a significant discount. The current
discount implicitly prices the unlisted
assets far below their market-based
valuations. We argue that unlisted assets offer both short- and long-term
opportunities, in particular in health-care related businesses that should be able
to grow substantially as a result of the COVID-19 outbreak.
Main risks
Investor’s risks relate mainly to incide
nts or valuation changes related to its
portfolio companies but also to the discount development.
Estimate and valuation changes
We reiterate our Buy recommendation with
an SOTP-based target price of SEK
578 (559). We see further underlying value potential in Investor’s unlisted
portfolio, Patricia. We do not make estimates for investment companies
Could someone explain to a dummy like me why Class A shares are now, and have historically been, a couple of percent cheaper than Class B shares? The only difference I’ve found from a superficial reading is that Class A shares have 10 times the voting power compared to Class B shares.
“Class A shares each confer one vote, and class B shares one-tenth of one vote. The dividend per share is the same for class A and class B shares.”
I guess it’s usually the liquidity difference that causes this. The dividend is the same. (E: Oh, it already said that in your quote.)
Yes, now we conquer Investor with the money of Finnish small investors!
I should probably end this hilarious discussion, lest anyone think that a couple of usernames here are in cahoots with marketing efforts. Vi ses!
Yeah, sometimes liquidity explains it, but sometimes the prices are the other way around. Sometimes, it can even be worth changing series with Nordnet’s trading fees, when you can get B-shares cheaper. This has often been wondered about.
Thanks for the good discussion and guidance.
It’s good that an A-series owner doesn’t necessarily have to sit at the Wallenbergs’ table at the general meeting and speak Swedish, as I somewhat feared.
I’m planning to buy Investor for a small amount in the next dip, and for a larger amount in a bigger dip later in the autumn, with an eye to subscribing to new shares.
Next, I was thinking of studying/laughing at either Sampo or Nokian Tyres.
Of course, Vatsaavia can be found in other investment companies as well, but if we compare it to Norvestia, for example, there’s no evidence of 100 years of investment success there.
Norvestia was mostly a hodgepodge of Helsinki Stock Exchange (Hesan pörssi) shares, some funds and bonds, and a few unlisted companies. It cannot really be compared to Investor in any respect.
A little punch regarding that rising dividend:
Following the decision to postpone the Annual General Meeting in order to gain more time to assess the current situation, the Investor Board of Directors has now revised its dividend proposal and proposes a dividend of SEK 9 per share. Depending on the development in the business environment as well as dividend decisions in the portfolio companies, the Board of Directors will assess a potential second dividend installment later in the year, in which case the Board will call an Extra General Meeting.
We’ll see if the dividend for this year ends up being bigger than last year’s. The previous proposal for this year was a SEK 14 dividend in two installments (10 + 4).
Looking at the statistics, it seems to be an “additional crown per year” kind of thing. Has anyone investigated whether this is based on some officially approved strategy? It has worked, at least, as the dividend increased, if I remember correctly, in 2018, even though the result was negative, and the following year, possibly 2019, the dividend continued its same boring growth trajectory, even though profit was almost ten times the dividend.
Even if you owned almost half the world, the big boys would still own more, and as the majority, they might want to hoard profits instead of scattering them to the winds for shareholders. The Wallenbergs with their foundations are probably the majority in Investor. If they are, they dictate the dividend. What does it matter if you don’t receive a dividend if it stays in the company and increases its value? It matters because even now, Investor can be bought for 20-25% below the value of its holdings.
Disclaimer: the company is among my minority holdings, so rights are reserved and responsibility is evaded.