{"id":1290,"date":"2025-01-30T12:07:38","date_gmt":"2025-01-30T12:07:38","guid":{"rendered":"https:\/\/incirrata.se\/?p=1290"},"modified":"2025-01-30T14:07:31","modified_gmt":"2025-01-30T14:07:31","slug":"vv-5","status":"publish","type":"post","link":"https:\/\/incirrata.se\/en\/vv-5\/","title":{"rendered":"Most important of the week: Strong January for OMX and Model Portfolio Opportunities | Quality weaker | Patience with Evolution"},"content":{"rendered":"
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The strong start to the year continues, despite a tech scare in the US following the launch of Chinese Deepseek.<\/p>

The launch of Deepseek, which quickly climbed to the top of the AppStore, showed that the Chinese can actually create AI of comparable quality to OpenAI, albeit at a significantly lower cost and without access to Nvidia's best chip. It raised legitimate questions among investors about whether there is really support for the high valuations that have driven the rise of Mag-7 shares and the entire Nasdaq.<\/p>

But after a 5% drop on Monday, the Nasdaq rebounded strongly during the week, while the Dow Jones is even higher than last week.\u00a0<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t

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The Swedish OMX30 is up 7% so far this year and is trading near all-time highs, remaining above the resistance that has prevailed for almost all of 2024 at 2650.<\/p>

As a historical reference, 2023 also started well while 2024 started weakly but turned around in February.<\/p>

However, several heavyweights have released reports that have not been praised by the market, such as Atlas Copco (weak outlook and problems in Vacuum Technology), SEB (no dividend increase) and Ericsson last week.<\/p>

At the moment it is difficult to see where the power to lift OMXS30 will come from. Below is my rough roadmap from January 14th which I think still holds up.<\/p>

Simply put, you can probably expect OMX to move down in the range from 2024, testing the moving average that should meet up around 2580, before the dividends come in and provide new fuel for rises in the spring.\u00a0<\/p>

But below are just lines on a picture. Of course, the rest of the reports will show the way.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t

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Strong start to the year for our Model Portfolio Opportunity<\/h5>

While the profit warning in Coor put a noticeable dent in the portfolio, several other holdings have performed strongly, with Getinge up 20% after a strong report and Hexagon up 13%. The only other negative contribution during January is Ovzon (entered the portfolio on January 22), -2%. Alleima (entered the portfolio on January 14) and Micro Systemation have also risen by double digits.<\/p>

In total, the portfolio is up 7%, in line with OMX. The portfolio should ideally have 10 holdings, and is currently invested 90%. Please let us know if you would like to discuss our stock cases in more detail.\u00a0<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t

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Race in MedCap weighs on Model Portfolio Quality<\/h5>

However, our other equity portfolio Incirrata Quality has not kept up with OMX.<\/p>

The Quality model portfolio is based on a quantitative screening to capture high-quality companies with stable growth and profitability, with healthy balance sheets and return on capital, with a valuation of at least 2% FCFyield.<\/p>

The portfolio is up only 3.5%, half of what OMXS30 has performed. This is largely due to the dramatic fall in MedCap after their profit warning, now down 38% in January. Otherwise, only Evolution is down 2.5% (more on that below) and CTT Systems is around zero.<\/p>

This model portfolio is fully invested and currently has 10 holdings, but this may vary depending on which companies meet the screening criteria.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t

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No fuel for quick turnaround in Evolution's report<\/h5>

Despite growth of 12.3% in Q4, increased profit (EUR 377m up from EUR 283m), increased dividend (EUR 2.80 up from EUR 2.65) and EUR 500m in share buybacks, the report was disappointing, mainly due to the weak margin forecast for 2025, in the range of 66-68%.<\/p>

This is motivated by prolonged challenges in Asia (cyberattacks against video distribution), a slightly more expensive resource mix and a stronger focus on regulated markets.<\/p>

So far, the bulls have been right about EVO. The Q4 report did not provide ammunition for a quick turnaround in the prolonged negative trend in the price, and a bet on a turnaround will require a little more patience.<\/p>

However, this image below from Quartr helps one appreciate the long-term story in EVO when you also consider that the price is down 50% since the peak in 2021. With a distribution of capital to shareholders of 7%, it could still be a good year for the stock.\u00a0<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t

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Strong start to the year for our Model Portfolio Opportunity. MedCap decline weighs on Model Portfolio Quality. No fuel for quick turnaround in Evolution's report <\/p>","protected":false},"author":1,"featured_media":1306,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[14],"tags":[],"class_list":["post-1290","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-update"],"_links":{"self":[{"href":"https:\/\/incirrata.se\/en\/wp-json\/wp\/v2\/posts\/1290","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/incirrata.se\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/incirrata.se\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/incirrata.se\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/incirrata.se\/en\/wp-json\/wp\/v2\/comments?post=1290"}],"version-history":[{"count":8,"href":"https:\/\/incirrata.se\/en\/wp-json\/wp\/v2\/posts\/1290\/revisions"}],"predecessor-version":[{"id":1305,"href":"https:\/\/incirrata.se\/en\/wp-json\/wp\/v2\/posts\/1290\/revisions\/1305"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/incirrata.se\/en\/wp-json\/wp\/v2\/media\/1306"}],"wp:attachment":[{"href":"https:\/\/incirrata.se\/en\/wp-json\/wp\/v2\/media?parent=1290"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/incirrata.se\/en\/wp-json\/wp\/v2\/categories?post=1290"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/incirrata.se\/en\/wp-json\/wp\/v2\/tags?post=1290"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}