Status January

Have been a while since I last wrote, and I am sorry for that. Comes from the reason that I got a new position at my work and it has been a lot of new stuff to learn and really go into depth on some things which I have just touched in the past. 

I guess it haven't passed anyone but the year has started shaky in a very volatile market (yes, I love it). 

I had the opportunity to increase my share in some of my beloved companies, stated below:

-Protector Forsikring (2 times)

-Handelsbanken

-Avanza Zero

-Hennes & Mauritz

Protector released Q4 numbers last week and they are as always delivering, expecting a GWP growth on 22% during 2016.

Hennes & Mauritz announced Q4 numbers today and met analyst expectations on everything except the dividend increase from 9,75 SEK to 10 SEK. The stock fell -5% today after the announcement, which I think is an overreaction as always from Mr. Market. -maybe I buy some more in the upcoming weeks.

The savings is going on as normal transferred 25 000 SEK (2,75K €) on the 25th to my savings account.

Besides this I am working on a new report on a company which I hope will be published this weekend.

Stay tuned,

EWI

First working day of 2016

There was the first day of 2016 over when the markets had open, and the long waited market correction is here. Can't say something else than that I love it, I am actually way more happy when the market goes down then the other way around.

I bought some Hennes & Mauritz after Deutsche Banks announcement of their lower target price, came in close to ATL today at H&M. Will be a good position to have for 10+ years.

I also got some Swedish index funds (Avanza Zero), which will be a good balance to my stock portfolio.

Chipotle is still falling, -6% at the moment. Would love to get some more, but the portfolio is to heavy weighted at Chipotle, so can't. 

Besides the stock market it was the first day at work after the vacation, and it went good. Lunch box of course and no spending at all. Perfect start at work for 2016.

Now will I make spaghetti bolognse to a total cost at 8,6 SEK (approximately 1 USD) per meal. Loving it!

Hope you had a great day!

Best regards,

EWI

Watchlist 2016

Thought it could be nice to share some part of my tracking list of stocks I am following. I will not reveal the whole part at once and will start with 15 stocks per month to keep the interest for the blog higher.

Important to highlight here is that the "Buy price" is not a deep analysis of the company, its a value I get when inserting the stock into a formula and rounded to the closest integer. As soon as the stock starting to trade close to my buy price I will go further with more complete analysis of the stock before the purchase. This means in other words that I could buy the stock for a higher price than my buy price in the watchlist and not buy even if the price is below my target. 

Below could you see 15 stocks of my watchlist

Name	Price ATM		Buy price		% Target
AIG (AIG:US)	61.97	USD	50	USD	1.2394
Betsson (BETSB:SS)	155.5	SEK	110	SEK	1.413636
Chubb (CB:US)	132.64	USD	100	USD	1.3264
Chipotle Mexican Grill (CMG:US)	479.85	USD	550	USD	0.872455
Gjensidige Forsikring (GJF:NO)	142.1	USD	110	USD	1.291818
Hennes & Mauritz (HMB:SS)	302.1	SEK	295	SEK	1.024068
Coca-Cola (KO:US)	42.96	USD	37	USD	1.161081
MasterCard (MA:US)	97.36	USD	91	USD	1.06989
Nike (NKE:US)	62.5	USD	57	USD	1.096491
Protector Forsikring (PROTCT:NO)	73.5	NOK	55	NOK	1.336364
Starbucks (SBUX:US)	60.03	USD	55	USD	1.091455
Handelsbanken (SHBB:SS)	116.3	SEK	100	SEK	1.163
Travelers Cos (TRV:US)	112.86	USD	100	USD	1.1286
Visa (V:US)	77.55	USD	70	USD	1.107857
Walmart (WMT:US)	61.3	USD	51	USD	1.201961

As you could see is a lot of stocks not below my buy price. The reason for this is probably because the stock market at the moment has a pretty high valuation compared to historic prices and that the interest rates are low. Which makes the cash available to flood to the stock market for a chance of higher returns.

Only Chipotle (CMG:US) are below my buy price and I have been buying on the way down a lot and the company as a position are now the biggest in my portfolio. Chipotle is trading this low due to a E.Coli and a Norovirus outbreak in November 2015 which lead to pressure on the shares.
I am confident that the company will overcome this over the upcoming two years and Chipotle will come back as the baby it was for Wall Street. In the past restaurant chains had similiar bigger outbreaks and I do not see this outbreak as a threat to Chipotle's future. More regarding the outbreaks and comparison to peers in the industry could be read here* from Alex Dumortier at the Motley fool.

My last purchase was Hennes & Mauritz at 296 SEK per share, which is a good company with a solid dividend and should be part of all long term investors portfolio.

I wish you all the best for 2016!

Best regards,
EWI


This should not be taken as a financial or any kind of advice and all the numbers on this blog could be incorrectly. I am not taking any responsibility for individuals using this information and all individuals using this information is using it on their own risk. 
*http://www.fool.com/investing/general/2015/12/22/contrarians-corner-chipotle-mexican-grills-shares.aspx

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