If you want to invest in a specific country or region, mutual funds or ETFs are maybe the easiest way. Usually that means that you don’t want to make an extra work to research the best possible single stocks in this given country or region. But there is also an intermediate of these. In this case you have to do a little bit more work, but it can also reward you.
Sweden has a large number of listed holding companies. They own a number of listed and unlisted companies. All you have to do is pick the most suitable one for you. One strong candidate is Investor AB.
Investor AB is an industrial holding company with a long-term, active investment portfolio strategy. The company focuses on investing in companies that emphasize innovation and product development. Investor AB’s so-called “buy-to-build” strategy seeks not to divest holdings, but rather to develop them over time in order to close the gap between price and value. A majority of its equity investments are made in the country of Sweden or in the Scandinavia, where the company mostly operates.
The strength of investor is that it is a stable choice among the investment companies. It is Sweden’s largest investment company with long-term focus on value creation. It has been in operation for over 100 years. And it’s strict controlled by the Wallenberg family, who’s aggregated holdings amount to 23.4% of the capital and 50.2% of the votes. Holding company’s portfolio consisting of approximately 70% listed companies and 30% unlisted. The focus is on quality companies with strong cash flows and a high return on equity.
Investor is famous and has a solid history of value creation and excess return on the stock exchange. It also aims to constantly increase its dividend. In most listed portfolio companies have a good upside potential, but also in the unlisted portfolio they have many interesting acquisitions. The company’s strong financial position enable also additional acquisitions.
Listed companies owned by Investor AB are Atlas Copco (share of total assets 14% / ownership 22,3%), ABB (10% / 11,2%), AstraZeneca (9% / 3,9%), SEB (9% / 20,8%), Ericsson (5% / 22,5%), Epiroc (4% / 22,7%), Sobi (4% / 36,2%), Nasdaq (4% / 11,7%), Wärtsilä (3% / 17,7%), Saab (3% / 39,7%), Electrolux (3% / 28,4%) and Husqvarna Group (2% / 33,1%).
Under the Patricia Industries are build a group of unlisted companies with long-term growth potential. These companies include Aleris, BraunAbility, Laborie, Mölnlycke, Permobil, Piab, Sarnova, Vectura, The Grand Group2, 3 Scandinavia and financial investments (it consist of European, Asian and North American investments that are a part of an Investor Growth Capital legacy portfolio)
Third part of the company is EQT. Even though it only represents about 5% of the total value of Investor it is very interesting in many ways. EQT intends to list on Nasdaq Stockholm. This listing will clarifies large hidden values in Investor as the holding is currently only valued a fraction of its true value.
Overall Investor’s balance sheet is extremely strong. The cash position is ample, and the debt is well under control. The company’s debt to equity ratio is 0.21.
The stock trades at a small discount to NAV and has grown NAV 11% over the last 10 years. The stock market price itself has risen 14% over the same period. In addition, the company has provided an average dividend yield of just over 3%.
Pretty good rule of the thumb is to buy a stock when it is cheaper than its NAV – the more the better. How large margin of safety you want is everyone’s own business. Also, the exchange rate and now relatively weak krona may increase the investor’s margin of safety.