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Stalwarts During Trouble - Investor AB

Jun. 04, 2020 12:35 PM ETInvestor AB (publ) (IVSBF), IVSXF5 Comments


  • During times of turmoil, we learn to appreciate the stalwart, recession-resistant companies of our portfolios, as they typically just "shrug off" headwinds.
  • Investor AB, a swedish Investment conglomerate, is one such stock/company.
  • The company remains somewhat overvalued in terms of its NAV, the typical valuation indicator for the company, but nonetheless offers defensive returns.
  • Investor is a "HOLD" at these valuations.

Investor AB (OTCPK:IVSXF) (OTCPK:IVSBF) is one of the more defensive, European stocks in my entire portfolio. It makes up almost 4% of my entire portfolio, and the purpose of this article is to report what exactly the company has done during the coronavirus, how it has been performing and what we can expect going forward.

Investor AB - How has the company been doing?

Investor went into the coronavirus pandemic with its valuation and sheet at a nearly all-time-high. Things were excellent for the nearly 500B SEK worth of assets that Investor manages. Like I mentioned in my previous article, over 95% of these assets are of a long-term ownership characteristic, and they fall into the following categories.

  • Electronics Manufacturing
  • Weapon Manufacturing
  • Medicine/Bioscience & healthcare
  • Appliances
  • Machinery
  • Fintech-companies
  • Finance/Banks
  • Commodities (such as timber)
  • High-tech/niche technical companies
  • Smaller investments, through its investment arms EQT and Patricia industries.

(Source: 1Q20 Presentation)

In my previous article, I go deeper into exactly what these investments are - but suffice to say they include both companies that you can invest in on your own, but also companies that Investor owns fully or that aren't publically listed - so the only way to own them is through Investor AB. Investor AB is best known for its massive stakes in Ericsson (ERIC), ABB (ABB), Atlas Copco (OTCPK:ATLKY) and AstraZeneca (AZN).

(Source: Investor AB 1Q20 Presentation)

The usual Swedish argument for investing in the stock is that it offers an almost ETF-like diversified exposure to the market at a mere 0.12% expense ratio, which has outperformed the SIXRX index by 18% growth as opposed to 12% for the latter in terms of annual rates of return.

So, what exactly happened to Investor during 1Q20? What happened to one of the most defensive Swedish companies, with an admittedly high industrial exposure, during

This article was written by

Wolf Report profile picture

Mid-thirties DGI investor/senior analyst in private portfolio management/wealth management for a select number of clients. Invests in USA, Canada, Germany, Scandinavia, France, UK, BeNeLux. My aim is to only buy undervalued/fairly valued stocks and to be an authority on value investments as well as related topics.

I am a contributor for iREIT on Alpha as well as Dividend Kings here on Seeking Alpha and work as a Senior Research Analyst for Wide Moat Research LLC.

Analyst’s Disclosure: I am/we are long IVSBF, IVSXF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

While this article may sound like financial advice, please observe that the author is not a CFA or in any way licensed to give financial advice. It may be structured as such, but it is not financial advice. Investors are required and expected to do their own due diligence and research prior to any investment. I own the European/Scandinavian tickers (not the ADRs) of all European/Scandinavian companies listed in my articles.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (5)

Great article, would love to hear your thoughts on InvestorsAB considering its trading somewhat above NAV, which is very rare for Investment Holding Companies on a historic basis. Another obvious choice for Swedish Conglomerates is Industriavarden, although it is based largely on Volvo Trucks and Consutructoin, which is a more Cyclical play.
Great article, I bought the stock last month. @Wolf Report is it possible to see your portfolio in shareville?
What is the difference between IVSXF and IVSBF?
The A-class (IVSXF) has one voting right, and the B-class (IVSBF) has a tenth of a voting right.
They are entitled to the same dividend amount, etc.
Thanks. You are widening my horizons on what to purchase.
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