Some changes to the company’s portfolio this past week: moving capital more towards conviction and partly opportunistic moves.
Sold:
- Stora Enso R at 11.325 EUR. Holding, which was intended to be temporary, sold on Tuesday. Return 26% in four months. (A small position remains in the ESA (Equity Savings Account); weight across all portfolios 2.4% → 0.8%.)
- UPM-Kymmene at 26.70 EUR. Trimmed significantly on Wednesday, contrary to my habits, at a loss (-14% and -2.5% including dividends). UPM had unintentionally ended up among the top holdings in the portfolio. I was convinced back then by, among other things, Pesonen’s visions. I thought it was a bargain sale (first batch in February 2024 at 31.20 EUR) and a semi-growth company investment, a credible case with biomaterials. Instead of a growth company, it turned into a cyclical turnaround case in the portfolio, which I bought at a bad time.
- → Sold 40% of this portfolio. Dropped from the second largest (7.7%) to sixth place (4.6%, in all portfolios 4.8%).
- This transforms the holding from a “mistake I’m monitoring” to a neutral, moderate conviction cyclical play, keeping you in the game for the eventual recovery
Bought:
- Norbit at 185 NOK. Last year’s figures were very strong and multiples have decreased to quite moderate levels for a growth company; my understanding of the company was shaky before, now at least a bit better; with the dip, the stock is (was
) available at ~the same price as during my first purchase. Since I bought it before, I’m now doing so with a better feeling, with more confidence in the company’s performance and outlook.
- → Added a third on top of the previous holding on Thursday. Weight now 3.9% (2.4% across all portfolios).
- For a while now (unbeknownst to me), I’ve been applying Pyysing’s process: “I buy a little on some random basis and then research more.”
- Kempower. All in — or not literally, but it felt a bit like it. I think I made similar quick moves in the autumn when I lowered the average price of Intellego. At least in this case, I know that it’s a real business.
And adding during the dip had been under consideration for a while.
- → On Wednesday after the results, I added 40% to the previous position in this portfolio at 13.50 EUR, and on Thursday another half of that amount at 12.34 EUR. So a 60% increase in total.
- Kempower is my largest holding and, weighted in euros, certainly the riskiest. The weight at the current melted price (12.30 EUR) is 11.5% of the company portfolio, 8.3% of all portfolios. It’s also a stock with which I have made (so far
) my biggest investment mistakes in 2023. - Below in more detail why I decided to add.
Kempower arguments and excuses
Granted, the Q4 results were on the disappointing side especially regarding profitability.
Perhaps weaker profitability will continue for years as they fight for market shares in regions where Kempower is a new player (especially Central Europe and North America). Volume growth should help.
Overall, in my view, the best product offering (a functioning satellite setup that maximizes the energy sold across the charging field + high-quality software services). For example, in Norway (where traffic electrification is furthest ahead), Kempower wasn’t the first mover, but it has captured market shares and become the largest supplier of DC chargers. Hardly just because they wanted to support a company originating from Finland.
Investment discussions focus a lot on passenger cars and at best slightly on heavy traffic, but very interesting is all other inevitable electrification of society (e.g., mines, ports, water transport), where Kempower seems to be in a good position. Not an afterthought, but the company has been built from the start with this in mind.
As a bonus (referring to recent stock price wonderings), this business won’t collapse overnight when AI arrives and disrupts. If, on the other hand, a miracle battery comes and disrupts, the DC business benefits from accelerating electrification, unless I’m completely lost. Chinese chargers might be a disruptive factor, but perhaps Western countries won’t want charging infrastructure, including the software running on it, to be extensively Chinese.
So, there is plenty of faith in the company’s global expansion. I see the company on its way to becoming one of the market leaders in its field. The share price will certainly bounce around before that, and I do intend to trim the holding when the opportunity arises, even if the view of the company itself doesn’t weaken.
I added more substantially now, remembering cases where I really should have dared to lower the average price properly (e.g., Neste, Kempower around ten). Adding now allows for earlier trimming with peace of mind, or that’s the intention.
Sunk cost fallacy likely influences my thinking, but a lot would have to change in the company’s operations or the market for my investment thesis to change significantly.