Savings guide for 2016

Thought it could be a good idea to share some savings tips for 2016, which every person that is aiming for financial independence should live by in the coming year.

-Although I need to admit I am not following all of them, but have as a goal to adopt as many as possible during 2016. I will also try to do a follow up within 6 months, to see how much these things saved for me.

Here comes Eighth Wonder Investing savings guide for how you should save as much money as possible during 2016:

1. Always pay your bills in time, and with in time I mean the exact date the when the receiver should have the money. Always store your money until the last day on a saving account with as high yield as possible.

2.Use the car as little as possible, walk, bicycle or ride the bus as much as possible. Preferably do not even own a car, one of the things that are draining a lot of cash.

3.Clear the garage and wardrobes and sell. If you haven't used it in the last 6 months, you probably don't need it or will never use it again. Sell, sell, sell!

4.If you really need a car, get one which is a couple of years old. The depreciation of the price is the largest in the beginning and it could loose as much as half it's value the first 2 years. After following tips number 2, the newer car with more energy efficiency will never make up the cost for the depreciation.

5. If you're buying clothes, always buy clothes with quality and with timeless design. Fashion trends is for people who is weak and never will be able to spend time on their yacht, cigar in their mouth and enjoying financial independence.

                 -Trust me, 95% of the time I am the best dressed man in the room and I am surely not the                               guy who spend the most on clothes.

6. Always buy food on a full stomach and buy in bulk.

7. Be as unfaithful as possible to all companies you have contracts with, electricity, banks, insurance etc. Always check best price and play them out on each other.

8. Going on vacation? Rent out your place on Airbnb.

9.You think you could live smaller? Rent out a room to a person, could gain you a lot of money and a new friend in life.

10. Visit a lot of physical stores, try a lot of clothes and sizes and always check prices online. Before making the purchase never forget to check the second hand market. If you don't like second hand, a lot of products are brand new and with full warranty.

11. Stop with tobacco and alcohol completely, will save you money and health.

12. Start to exercise, will make you more healthier (sick days costs a lot of missed income), same shape (yes, you could use the clothes you bought in your 20s) and you will look better.

13. Switch jobs, could boost your salary and you will meet a lot of new friends.

14. Do not eat pre-made food from the factories, make the food yourself instead. Both healthier and cheaper.

15.Never have anything electric on standby and try to connect as much as possible to power strips which should be switch off during night.

16.Have the right air pressure in the wheels on the car, often you could have a bit more then the recommendations from the car companies. This will lead to less fuel consumption.

17.Stop eating snacks and all the "snacking". Costs you a lot of money and you don't need the nutrition from it. Check below how much your body needs in terms of nutrition, goal weight etc. and balance it:
                               http://www.active.com/fitness/calculators/nutrition

18. Always bring food boxes to work. Will save you time and money.

19. Use a credit card as much as possible, pay in time and use the free interest period. This will give you reward points which you could use on more fun stuff.

20. Take care of your teeth and do practical dental care at home. Reducing the cost for professional dental care.

21. Cancel all the amusement contracts you have, Spotify, Netflix, Pandora etc. spend time with family and friends instead.

22. The last but as important as the first, track all your purchases and look over them after every month, to see where you could save extra money.



This should not be taken as a financial or any kind of advise and all the numbers on this blog could be incorrectly. I am not taking any responsibility for individuals using this information or any damage coming from it.

Vardia Insurance Group - Update and PNL forecast Q4

As I told you in my last post, I'm back with an investment in Vardia Insurance Group. This time smaller then last time though (10 000 shares). 

So why didn't I stick with my investment in Vardia and sold it when the accounting problems were announced and why did I go into it again?

The question is from my perspective simple to answer; When the accounting problems were announced all information I based my former investment in Vardia on were wiped out, since I couldn't trust the information the company had been giving to the market. In other words, no body which invested in Vardia during the time when the accounting problems were announced until last week when Price Waterhouse Coopers (PWC) did their external diligence on Vardia's bookings knew if they could trust the information from the company and were just gambling. Exactly the same way as going to the Casino and bet on black or red on the roulette table.
-This is the only reason why I didn't keep my shares in Vardia and sold them just after the announcement.

Now on the other hand, PWC made the diligence and no discrepancies were found, the information Vardia has communicated is solid and the case is from my perspective better than ever at this valuations.  

We have seen some positive revaluation of the stock since the PWC announcement were made, around 15% in the time of writing (1.65 NOK per share). I would have expect some more revaluation upwards after the announcement, probably that will come as soon as Pareto Securities (PAS) stops the heavily selling in the stock. Although I'm happy as long the price stays low since its a good opportunity to buy more shares. 

Vardia's GWP would at the moment be around 1550M NOK and at a valuation at 1.65 NOK per share we are talking about a GWP ratio on 0.44 x GWP which is an absurdly low valuation and is probably lower then what the liquidation value would be in a worst case scenario. This statement is also backed by what Vardia's peers has been acquired for in the past, how much the customer base has been worth (Aktia 0.61 x GWP, Moderna Försökringar 1.0 x GWP, NEMI Forsikring 1.0 x GWP). 

PNL Forecast Q4 

If we were looking at the past quarter for Vardia (Q3), the numbers were not perfect, there were somethings which could have been better. Total loss for Q3 were -56M NOK (Q2: -43M NOK) but were impacted by some factors. New management, whichs normally takes non-recurring costs to get clean sheets the first quarter (Q3: -27.5M NOK). The claims ratio were high 97% due to some larger claims which were utilized during the quarter. The operational costs reductions from the new organizational structure were only in place since the 10th August, only the last half got the positive cost impact from the new structure.
If we now look at the forecast for Q4, I expect we will see around the same cost reductions as we have seen from Q2 to Q3 (if you exclude the non-recurring costs) which is a 33% cost reduction. Together with that cost reduction I also think we will have a better claims ratio then Q3 gave us (Q3: 97%), which I think will be around the trailing average the last 12 months, 81% claims ratio. When applying this together with my calculations we should end up with a forecasted loss on around 6-8M NOK and then in Q1 start to show profit. This loss is good and will keep Vardia above the solvency margin until they start to show profit.
Maximum loss in Q4 without being in violations with the solvency requirements are -17M NOK, which is an important number to have in mind for the upcoming report.


As you probably could read, the case in Vardia is tempting and I would say the risk for loosing money at this valuation is small.

Happy new year!

-Eighth Wonder Investing

Full disclosure: Long Vardia Insurance Group

This should not be taken as a financial or any kind of advise and all the numbers on this blog could be incorrectly. I am not taking any responsibility for individuals using this information.

Status update - Portfolio, Equities, Savings

Hi everyone,

 

Think it's time for a status update, regarding the portfolio, equities and savings.

 

A lot of changes has been done in the portfolio, since the mess with the accounting problems in Vardia. The portfolio has now got some structure and more longterm holdings,even if I am still building the portfolio at the moment. As I often say: "Rome wasnt built in one day".

 

The portfolio today consists of 5 equites and two index funds.

 

The equities are as follow: Starbucks (SBUX), Mastercard (MA), Hennes & Maurits (HMB:Stockholm), Chipotle Mexican Grill (CMG), Vardia (VARDIA:Oslo).

 

Index funds: Avanza Zero and DNB Global Indeks.

 

In short the portfolio has been declining since purchase date overall, Avanza zero which is a swedish index fund have not been performing well and Chipotle Mexican Grill as well, due to a E.Coli outbreak. Although it gives me great buying opportunities which is good, have been buying Chipotle a lot over the last couple of weeks/months and have now stopped since it taking up to much of my assets. Mastercard, Starbucks and Vardia are all performing.

 

The next purschase will probably be Hennes & Mauritz, if the decline continues. Everything below the stockprice 300 SEK for Hennes & Mauritz do I think is a good buying opportunity for a long term investor.

 

Total value of the portfolio will be around 230 000 SEK by the end of this year. Saving rate for this year has been under all critism and need to be increased over the next year. Target number for saving next year should be around 120 000 SEK, this should be a problem since I increased my salary heavily in my new position in November 2015.

 

In the upcoming weeks will I post some articles around the portfolio, equities holding at the moment, goals for 2016 and a saving schedule for the new year.

 

Stay tuned!

 

Merry christmas and a happy new year all!

 

Best regards,

EWI 

ETFs or Index Funds? Whats the Best?

Description ETFs and Index funds
In the last years ETF:s has gained in popularity and become one decent alternative to the average investor. In the simplest terms, Exchange Traded Funds (ETFs) are funds that track indexes like the S&P 500, Dow Jones, OMXS30, etc. When the investor buy shares from an ETF, you're buying shares of a portfolio that tracks the return (Yes, yield as well) from that certain index fund that the ETF are replacating. ETFs are traded exactly like an equity investment, as stated you're buying shares in an portfolio.
In other words index ETFs are not trying to beat the market, they're trying to be the market or the index.
 

Index funds on the other hand is passively managed mutual funds, made to mirror the performance of a market index (i.e S&P 500, Dow Jones, OMXS30), which in other words is almost the same. Index funds compared to actively managed mutual funds has two primary advantages:

1. Lower management cost is the first one, which means the guys behind the fund takes less from you for the service of managing the fund. This is often around one-half to two-thirds less than actively managed mutual funds.

2. On average the index fund has gained the investor more return than actively managed funds, in other words a lot of experts has a problem to outperform the market (index). Of course there are some actively managed funds that have generated significantly higher returns than index funds.

ETF versus Index funds
ETFs has some advantages which comes with the flexibility the investor has since they are traded as equity on the stock exchange, this means they could be bought and sold instantly, which means you could close the position any time. This compared to the index funds, when you get the end price of the day. The rules out from this is if you're an active investor the ETF will suit you better. Passive normal investors will on the other hand love the index funds for their simplicity, no need for brokerage account.

Dividends are often payed out on index ETFs, which is the opposite compared to a normal index fund where they keep the dividends within the fund. This has both advantage and disadvantage. For a long-term investor I would say that keeping the dividends within the funds is better (You dont need to pay comission when you need to re-invest the dividend again).

Whats the best is hard to answer and I will say as so the journalist says; it depends.

Hope you enjoyed the text and it was meaningful.

Best regards,

Eighth wonder investing

Building blocks in my portfolio strategy

As I told you in the last post that I have been working on a new strategy, which will be a mix between stocks and index funds. This post will be dedicated to describe the portfolio and the reason why I believe this is the best way to go.

From my experience in Vardia I reliazed the importance of diversification; the portfolio down 25% in one day is pretty bad when believing in value investment and that day got me to re-consider my diversification strategy and in the end my whole portfolio strategy. 

If you don't have a clear strategy for diversification and hiding behind Warren buffets strategy that is that if you know your companies you don't need to have to many in the portfolio (good article why Warren Buffet doesnt diversify here). I truly recommend you to re-consider your exposure to a few assets and think about all factors that could impact returns, everything from fraud to hackers gather all their data (think about Ashley Madison).

The new portfolio strategy will be built like this (percentage);

Stocks: 35%

Swedish index funds: 35%

Global index funds: 15%

U.S. index funds: 15%

This setup will be the building blocks in my portfolio, there will in most cases also be around 5% cash for unexpected opportunities. This 5% cash will be smaller as the portfolio grows and when it gets bigger there will be more monthly purchases. Why did I go for this strategy? Time.. Since I started to work I didn't reliaze how much time I spend on the work and how tired I am when I come home. In other words, I don't really believe I have the time to have 100% stocks in my portfolio, just because there's not enough time to analyse them and find the risks involved with them, therefore the diversification.

At the moment I'm 50% invested, and this will be the case for a while, since I believe we have pretty high valuations on the markets. This will change as soon as the market conditions are better, i got some this week; MasterCard (MA), Starbucks (SBUX) and DNB Global Indeks fund.

Now I'm off to a pool party, take care!

Eighth wonder investing

What did go wrong in Vardia and The portfolio status

Vardia Insurance has been on my mind for a long time, lost 50K SEK (approx. 5400 euros) in one day.
Rough day? Yes, was a used Rolex Submariner which went away over a night..

Mad? No, could only blame myself..

Before writing what did go wrong maybe it's better to say how the days went when Vardia went through Armageddon and until now.

26th February 2015, Vardia is trade stopped from request from the company and postponing the announcement of the fourth quarter earnings.

26th Feb - 4th March, a lot of speculations is going around on blogs, newspapers, forum etc. I have a really bad feeling but couldn't imagine what were to come.

3rd March 2015, due to an accounting principle which has to do with booking of sales costs makes Vardia show a loss at 219 million NOK (approx. 25 million EUR). The stock is dropping 50 percent in the opening. 

4th March, I'm liquidating my whole portfolio, including Vardia and is back to zero from my gains in Protector. 

4th March - until June 2015, my trust for the stock market is zero, lost money on Tesco on accounting principles and now this in Vardia. Have still saved a lot of money during the months, but mentally I'm not ready to go into the stock market again. 

Thinking about other investments, properties etc. but know that the stock market is where you should be to make the real money with as little risk as possible.

Deciding to take some vacation from work and really rest, get my mind together and continue the thinking. Going to Hawaii for two weeks on my saved money, to start over when I come back with a new strategy (will come back to that in a later post, but shortly a mix of index funds with stocks). 

Over to what really went wrong in Vardia and in my analysis;

As stated above, Vardias accountants had a different view on how to accrual costs, sales costs. Accordingly to Vardia they were not allowed to do accrual the sales costs anymore and had to back-calculate everything and take it as a cost, 219 million NOK was gone over a night. 

They launched a new shares issue on 275 million NOK and with an interim loan to meet the solvency requirements in Norway. This together with massive cost reductions would make them profitable..Already here I knew these money will not be enough to make them profitable. Cost reductions take at least 3-6 months before you see any impact, it's not like you stop paying your employees the next day.

Last thing I read was that they will now do a management buy out (MBO) of the sales organization to bridge until they are profitable for 30 million NOK (?). Maybe that will be enough, didn't pay that much attention but it seems it's only good for management and not for the shareholders. 

What did go wrong in my analysis? Mostly a lack of time and limited knowledge in insurance accounting. In other words, I could only blame myself..

Portfolio status today;

50 000 SEK (buy price) in Avanza Zero (bought the last month)

10 000 SEK (buy price) in DNB global index

6282 SEK per share (buy price) - 3 shares of Chipotle Mexican Grill (CMG)

745 SEK per share (buy price) - 16 shares of MasterCard (MA)

430 SEK per share (buy price) - 36 shares of Starbucks (SBUX)

Hopefully I will be posting some more now, when I'm back on my trip to financial independence! 

Will update the portfolio and trades and also get back with a post on my new strategy.

Best regards,
EWI

This should not be taken as advise as always and all the numbers on this blog could be wrong and I am not taking responsibility for anyone who uses this information.

Vardia Insurance Cooking The Books?

Vardia Insurance were expected to announce their Q4 today, but instead they gave the market the message that the financials for Q4 will be announced tomorrow. On the top of this they also halted the trading in the stock until the release of the results.

Vardia's comment today were this:

The postponement is due to new information received from the Company's auditor regarding accounting principles. Vardia has after consultation with Oslo Børs decided to suspend the trading of the stock until the results are published.

In addition to the comment  Aleksander Nordahl IR-responsible at Vardia stated during the day that this were the case, with the vague explanation:

We have received new information from the accountants and has in discussions with Oslo stock exchange suspended the trading in the stock.

So what could all this mean? It's at least not positive for The reputation thats for sure. Experience say me that is use to be bad when stocks getting halted due to accounting troubles, but who knows (still hasn't forgot the cold shower from Tesco). 

I have actually been speculating the whole day on what a valid reason could be for the postponement and the halted trading and came up with these four options which I see are the most likely ones:

• Formalia. Could be some sort of error in the way of presenting the numbers which led to no signature from the accounting firm which validates it. Things that speaks for this is that the message came as a lightning from the sky and that they only postponed it one day. I am still concluding that this is the dream scenario and consider this the most unlikely one.

• Tax issues. Speaking for it; have been on the wall before. Still doesn't see this scenario is very likely either, one day postponing is way to less for a tax problem. Worst case scenario there will be a new issue of the stock.

• Assets. The assets are not what they should be. Could be due to different things, most likely some issue regarding the acquisitions Vardia made in the past. Worst case scenario huge new issue which fails and bankruptcy. 

• Income/Costs/Reserves. Miscalculus in some way of the cost of goods sold, revenues or that the reservations for the Insurance business has been to low. Worst case scenario here will be a new issue of the stock. This option is the most likely from my point of view.

On the other hand we still have the sales (which should be correct) and the GWP which is backing up the case.
Whatever happens tomorrow the stock will most likely open down and that could open opportunities for more purchases. Tomorrow will be an interesting day!

Remember that this is only speculations and hopefully transparent facts will be announced tomorrow.

Best regards,
Eighth Wonder Investing



Full disclosure: I am heavily invested in Vardia Insurance Group with 3200 shares.

Thoughts About Settling Down

Today I asked myself that question, what would I really do with more money or if I were financial independent?. The question is really hard to get and very vague.
The definition I have for more money are financial independence.

Let's start with financial independence, which differs a lot between people. When are you really financial independent? For me personally is that question impossible to answer because it depends on so many factors, as everything else in this world..

Wikipedia is stating that financial independence is a state a human has when he or she has sufficient wealth to live, without having to work actively for basic necessities. Often financial independent peoples assets generate more income then their expenses.
Another definition comes from a survey done 2013 by Capital One 360. The survey states that 44% of U.S adults said financial freedom meant not having any debt, 26% said it meant having enough saved for emergencies and 10% defined it as being able to retiring early.

From my point of view neither Wikipedia nor Capital One 360 has right here, just because of the simple reason that it depends so much external factors that its so hard to answer this question, especially for me at an age of 25.

Let's bring up a scenario.
I guess a lot of people like me wants to live in a nice neighborhood, fancy car and friends with the same mindset around you. In other words this neighborhood will be wealthy and to a certain extent contagious. Why? 
People with high incomes consumes a lot, which enriches corporate to small medium business and those companies will start to demand manpower. These things is pushing salaries north and then the snowball is rolling with the society as a winner and me as financial independent as a loser?

I dont know but its a good thing to think about, should you choose to settle down in a more "expensive" neighborhood or in a cheaper region like Asia for example.
I will definitely put that up on my to-do-list, what is actually financial independence for me.

Besides the philosophical thinking I am working on a general analysis of the fast food industry, which will probably be done and posted in the upcoming weeks.


Best regards,

Eighth Wonder Investing

Marvelous Company, Marvelous Numbers - Protector Q4 2015

As probably no one has missed by now in the blog world, Protector's Q4 report was astonishing and the stock market received it with open arms. Protector is now up 10.11% since the announcement of the report.
The best announcements in the report from my side were that Sweden and Denmark are now showing profit and that is under extreme growth. Sweden is growing GWP by 121%, Denmark with 89% and Protector overall with 28% to 2375M NOK (1861).

Here are some more candy from the report,

• Protector forecast higher profit 2015 and with 18% growth.
• Protector increases the dividend from 1.75 NOK to 2 NOK. 14.28% increase!
• Combined net ratio down to 84.5% from 86.7% last year.
• Investment portfolio know has a value of 4 958M NOK up from 3 999M NOK last year.
• Profit per share grew from 3.47 NOK to 4.63 NOK.

New target price for Protector are 68 NOK, this comes from that I think they will make around 5.785 NOK per share. Which means a profit growth on 25% and a future P/E 11.75, should be doable for the great company Protector!

Besides Protector's marvelous announcements I have increased my share in Vardia Insurance at the price 27.9 NOK with 1400 shares. Total numbers of shares in Vardia are now 3200 shares and a total market value of 102 486 SEK. I will continue to grow my shares in Vardia since that it the most udnervalued company at the moment.

Best regards,

Eighth Wonder Investing

Vardia Insurance - January Sales

Vardia Insurance continue and continue to deliver good growth and over my forecast sales also the month of January.
As I said in on of my previous posts: What Could We Expect From Vardia In Sales 2015 my forecast were 89.3M NOK and sales came in today at 92.6M NOK compared to 79.5M NOK last year. Which is completly magnificent!

The first month of sales could also be a good guidance for the next month sales if we just apply it on the assumed working days there will be in February 2015, which is 18 days.
18 days gives us a sales forecast on 119M NOK for February, which sounds a bit high for me but I am confident that Vardia will make over 110M NOK in February, which will be a new record in sales for a month.

Except the sales figures CEO Ivar S. Williksen also said today that Denmark's sales figures are growing as expected and that they also have increased significantly the commercial business in Sweden, and along with our in-house sales forces of agents and brokers they have the goal to be the best selling Nordic insurance in 2015. Impressive!!

On top of the sales figures Vardia has also got a really interesting customer, the Swedish Police Association which has over 20 000 members and are now leaving Moderna Forsakringar for Vardia Insurance Group. more info could be find here: new alliance for Vardia (only swedish).

I am actually surprised that the share price weren't heading north today after this numbers, but I guess as long as DNB Markets are pouring insane amounts of Vardia shares on the market I do think it will be hard for the share price to get higher. Although nothing to complain about since I could be in need of some more Vardia shares at this price.

As said before 2015 will be the year for Vardia Insurance group!

Best regards,

Eighth Wonder Investing



Note: I will increase my share in Vardia in the upcoming days, weeks, months, years.

Full disclosure: Long Vardia Insurance Group (VARDIA)
Disclaimer: All text on this blog is not any form of investment advice, this is only for personal use.

Summary of January

Time for the summary of the first month in 2015. 

Must say that it has been a great month, a lot of action, but great.

Let's start with the first thing, I actually sold (it doesn’t happen often) Tesco this month.  I haven’t been very impressed about how they have been performing over the time I owned the stock, declining sales almost quarter after quarter and accounting troubles etc. After the last increase of the share price I decided that it’s time for me and Tesco to say good bye to each other for this time at a share price in SEK after costs of 85.490 SEK (TSCDY, OTC).

In other words the portfolio at the moment are only consisting of 3 companies, Protector Forsikring, Vardia Insurance and Hennes & Mauritz. I must admit that for me a portfolio consisting only of 3 companies are way to focused. The target is to own a portfolio consisting of 5-8 companies, but as you probably noticed its hard to find wonderful companies at a fair price when S&P 500 are doing new highs every week.

Next buy will be Vardia Insurance if their sales numbers for January are in line with my forecast.

Achievements January 2015

• The portfolio had a great performance the last month and are up to today had an increase of 12.12% this year with a total value at 239 703 SEK (approx. 26 330 EUR). 
• In terms of savings was 12 000 SEK transferred to the portfolio for future stock purchases.
• New ATH (all time high) for the portfolio.
• Amortized my student debt with the total amount of 1893 SEK, not much but still in line with the goals.

Improvements for February

• Save more money, still wasting money on things I don't need.
• Do more analysis of companies.

Transactions updated with the sell of Tesco.

Transactions:

2015/01/27 – SELL Tesco – 487 share +41 638 SEK

2014/12/30 - Dividend Tesco +165.3 SEK

2014/12/17 - BUY Vardia Insurance Group - 1000 shares - 26 911 SEK
2014/12/17 - BUY Protector Forsikring - 720 shares - 24 820 SEK
2014/12/16 - Dividend MCD +521.34 SEK
2014/12/09 - SELL MCD +54 810 SEK
2014/10/08 - BUY Vardia Insurance Group - 800 shares - 23 647 SEK
2014/07/16 - Dividend Tesco +1728.49 SEK
2014/07/08 - BUY Protector -720 shares -30 983 SEK
2014/06/17 - Dividend MCD +430.4 SEK
2014/05/17 - Dividend H&M +1662.5 SEK
2014/03/19 - Dividend MCD +411.12 SEK
2013/12/17 - Dividend MCD +425.57 SEK
2013/01/07 - Dividend Tesco +712.98 SEK
2012/05/10 - Dividend H&M +1662.5 SEK
2011/12/12 - BUY H&M - 175 shares - 37 376.6 SEK

Best regards,

Eighth Wonder Investing

What Could We Expect From Vardia in Sales 2015?

In recent time have I seen several discussions regarding Vardia sales numbers on different blogs and almost fierce comments from some readers in the commentfields. Therefore I want to highlight this post to really focus on the Sales and try to give a fair estimate on where we would end up after 2015.

Before we start I want to highlight the big Q everyone has:

Q: What if the big insurance companies just lower the price and compete Vardia out of the market?

A: Vardia's business model is to provide low risk customers with insurance products. Since low risk customer will do less insurance claims then high risk customers, Vardia could offer the product to a lower price. In other words Vardia says that, why should you share a risk with high risk customers when you are a low risk customer?

This is the main reason why Vardia will be a winner in the end, and this business model is not done by the big insurance companies today. Of course to this you could add several things in Vardias advantage like more efficient IT, lean organisation etc. but it's still the core business model that will make Vardia successful. 

Now over to the numbers,

To make this forecast as correct as possible I will investigate how 2014 sales number were per annual, monthly and daily basis. Then adjust a modest annual sales growth on below market expectations on 15% (For Vardia this is modest). 

How was sales on annual and monthly basis 2014?

-Total sales of 1044.3 million NOK 2014.

-Average per month 87 million NOK.

How was sales on daily basis 2014 and how will it be 2015?

Public holidays 2014 which fell on a weekday (Could have 1 day wrong here on some country) :

Denmark: 11 days

Sweden; 15 days

Norway: 12 days

We take an average here and say 13 days in general.

Weekends (Saturday and Sunday) 2014: 104 days

Holiday (I assume everyone has 5 weeks); 35 days

Number of days per year:  365 days

How many effective working days do we end up with per year now?

365 - 13 - 104 - 35 = 188 days

If we assume 15% sales growth next year we end up at 1200.6 million NOK, divide that per effective working day, we have sales per day at: 6.38 million NOK.

How will sales be per month 2015?
After analyzing local holidays and normal vacation patterns I did this assumptions for effective working days per month for 2015:

January: 14 Days
February: 18 Days

March: 18 Days

April: 17 Days
May: 17 Days
June: 12 Days
July: 9 Days
August: 13 Days
September: 19 Days
October: 19 Days
November: 19 Days
December: 14 Days

If we now apply the assumed average sales per day on effective working days for 2015 we end up with a sales per month like this:

So next year, annual sales forecast on 1200.5 million NOK and GWP forecast on 56-60 NOK per share. 2015 will be a great year for Vardia Insurance!!

Sincerely,
Eighth Wonder Investing

Note: Vardia offer products to everyone, but high risk customers gets a high premium.
Full disclosure: Long Vardia Insurance Group (VARDIA)
Disclaimer: All text on this blog is not a form of investment advice, this is only for personal use and I disclaim myself  for misspelling or wrong calculus.

Protector Forsikrings Forecast and Announcement January 20th 2015

Brief notes about the announcement from Protector today.

Protector (PROTCT) today announced their own forecast and a significant volume increase for year 2015.
Their CEO Sverre Bjerkeli said this today about 2015:

"The Company experiences strong growth in January and expects Gross Written Premiums (GWP) to increase to 18% (15% measured in local currencies) over full year 2015. Norwegian business areas will contribute with single-digit growth, while Sweden / Denmark will grow approximately 50% in aggregate. Gross and net written premiums are expected to experience identical growth rates. 

This text is really a statement that Protector Forsikring has just started, 18% (!) growth is magnificent and really show how much hidden value there is in this insurance company. A wonderful company like this should be traded at higher price, that's it. Mr. Market wake up!!

Looking forward for the 2014 annual report 12th February.

Other highlights in the announcement were:

• Strong premium growth in Q4, up 19% since last Q4. Gross premiums written amounted 282 million NOK.
• Net GWP Q4 was 250 million NOK, up 24% since last Q4.
• GWP 2014 were 2.375 million NOK, up 28% since last year.

Over and out,
EWI

Portfolio and Transactions - New page on the blog

Decided that its time to be more transparent in my portfolio and to track the transactions, just because of two reasons, first that it will be a nice thing for me to have during this journey and secondly that I hope it will inspire someone to start the same adventure as I will do.

Below you could see how the report will look like, yes I know very simple. The report will be updated monthly with the consisting portfolio and the done transactions during the period.

Best Regards,
Eighth Wonder Investing


Latest update: 18012015

I am at the moment invested in 4 companies. My portfolio and the changes will be updated once a month. All values in the portfolio summary will be denoted in SEK, total value of portfolio and changes will be denoted in SEK and EUR.

Portfolio today:

Transactions:

2014/12/30 - Dividend Tesco +165.3 SEK

2014/12/17 - BUY Vardia Insurance Group - 1000 shares - 26 911 SEK
2014/12/17 - BUY Protector Forsikring - 720 shares - 24 820 SEK
2014/12/16 - Dividend MCD +521.34 SEK
2014/12/09 - SELL MCD +54 810 SEK
2014/10/08 - BUY Vardia Insurance Group - 800 shares - 23 647 SEK
2014/07/16 - Dividend Tesco +1728.49 SEK
2014/07/08 - BUY Protector -720 shares -30 983 SEK
2014/06/17 - Dividend MCD +430.4 SEK
2014/05/17 - Dividend H&M +1662.5 SEK
2014/03/19 - Dividend MCD +411.12 SEK
2013/12/17 - Dividend MCD +425.57 SEK
2013/01/07 - Dividend Tesco +712.98 SEK
2012/05/10 - Dividend H&M +1662.5 SEK
2011/12/12 - BUY H&M - 175 shares - 37 376.6 SEK

Vardia Insurance - December Sales

Finally the sales for Vardia Insurance arrived, lets have a look at them.

As expected the total sales were lower in December than in November, 79M NOK versus 105M NOK, due to the Christmas holiday. 79M NOK is an OK number but not more than that would I say, my forecast were slightly higher as could be seen here:December Sales Forecast

Let's do the calculation to see how the sales actually were adjusted to working days.
I assume Vardia's employees only are on duty working days, which is 5 days a week. As far as I could find none of the countries Vardia is operating in had local holidays in November, which is Norway, Sweden and Denmark.

Let's start,

November
20 full working days. Which is below average, normal month has 21 working days.

December
If we consider local holidays in December we sum up to 18 full working days. Local holidays for all the countries are as you probably know, Christmas Eve, Christmas day, Boxing day, New Years Eve. In other words, but how people are actually only taking the local holidays off during Christmas?

Not so many people I would say..  So the real question we should ask us are if sales people at Vardia took additional vacation during Christmas? Most likely.. 

For me this question is impossible to answer, but I could assume from my experience from family and friends that a normal person has around 6 days vacation during Christmas which means that December had 15 full working days. As I said above November consisted on 20 full working days and the outcome of November were 105M NOK in sales.
December consisted of 75% of the working days of November (15/20). If we after that multiply that 75% with the sales of November to see the sales numbers of November applied on the same working days as December, we get:

105M NOK x 75% =  78.75M NOK

Assume then a modest growth on 1%:

78.75M x 101% = 79.53M NOK

In other words we missed target with approximately 800K NOK which is almost nothing but its not a magnificent month for Vardia. Although my view on Vardia is still the same, the company should at least be valued as 1.0 x GWP, which should be around 36 NOK per share now. On the other hand as longer the price stays low as more shares I could come over.

Important to highlight is that 1.0 x GWP are a very modest valuation and with the sales growth we seen in the last year for Vardia an even higher valuation wouldnt have surprised me at all. 

Sincerely,

Eighth Wonder Investing

Bi-weekly Roundup and Forecast December Sales Vardia

Its time to start with Bi-weekly roundups to keep track on my last two weeks and see that I am on the right track to make my goals for 2015. This post will also include some thought for the sales figures that Vardia Insurance is announcing tomorrow.

Lets start with the financials for the first 11 days of this year.

The salary for December was really good due to a bonus, ended up at a salary income at 3215 euros. It has been some bad consumption during these days, would like to highlight some of them.

• Bought designer plates and forks for 750 SEK (approx. 78 euros).
• 113 Euros are spent on alcoholic beverages.
• 48 Euros spent on taxi trips.

As you see always room for improvment, on the other hand if you deduct these expenses the month has been really good I must say, at the moment 2169 Euros are left when all invoices are paid. The forecast is to have 2000 euros left when the new salary are dropping in on the account the 28th January.

The portfolio is up 2.08% for 2015 which is great but I would have preferred to see falling share prices instead. Just by the simple reason that I know I will be a net buyer of stocks in at least 7-8 years from now on. The portfolio still consists of the same companies, allocation in brackets. 

• Hennes & Mauritz (28.1%)
• Protector Forsikring (29.3 %)
• Vardia Insurance (24.5%)
• Tesco (18.01%)

The company which will get my next purchase is Vardia Insurance. Vardia is the stock with the best intrinsic value. Target price is 1.0 x GWP (Gross written premiums) are now at the moment around 35 NOK, and forecast for 2015 are 50-55 NOK in GWP. Will continue to buy the stocks until we have a valuation on 1.0 x GWP and if nothing happens in terms of falling sales for example.

Forcast December Sales Vardia

I assume 16 full working days in December (normal month consists of 21 days). Which is 23% less working days from a normal month. I apply a growth on 1% and then deduct the loss in working days, after the calculus we assume that the sales will be around 80.295 million NOK in December, will be really interesting to see were we end up tomorrow.

Over and out,

EWI