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Cashderivatives.se Dynamic Value Portfolio

The portfolio is characterized by

▪ Scandinavian equities

▪ Value investing

▪ Concentration

▪ Trading

The portfolio is a private portfolio with undisclosed return/risk targets. The main purpose of the publishing of monthly portfolio reports here is to show an example of use of the investment portfolio report concept and tool ManagerSheet.

Investment Guidelines

▪ Scandinavian (Sweden, Norway, Denmark, Finland) equities (90-100%)

▪ Cash (0-10%)

These are all "soft" limits.

Value Investing

The portfolio invests in value stocks based on the following properties in order to find true value stocks, and to avoid so called "value traps".

▪ Tangible Price/Book

▪ Price/Earnings (historical 10 years inflation adjusted average)

▪ Financial status

▪ Quality of assets

▪ Ownership structure

▪ Market position

▪ Dividend history

The starting point is low valuations in terms of tangible book values and historical earnings, which is a strategy that relies on mean reversion, i.e. that the value of low valued assets will return to some historical mean (and possibly also overshoot).

Concentration

The portfolio is in general concentrated in only a few positions, and if the right conditions are fulfilled, the entire portfolio may be concentrated in just one single position.

It is often put forward by pundits that diversification is key to risk mitigation. The starting point here though, is that the quality of assets is more important in this respect, and that this is especially true when it comes to mitigate extreme risk.

Trading

On a daily basis the trading turn-around amounts to approximately 5-15% of AUM, and the trading strategy tries to benefit from temporary fluctuations in supply and demand in the stocks in the portfolio.

Copyright (C) 2011-2013 Stefan Johansson, Cashderivatives.se