President & CEO, AB Industrivärden
Helena Stjernholm: Fullt fokus på Industrivärdens befintliga innehav | EFN Marknad 27 oktober
Investmentbolaget Industrivärden har sju bolag i sin portfölj. Bolagets vd Helena Stjernholm säger i EFN Marknad att det är på dessa fokus ligger just nu. Men vad som händer i framtiden vet man inte.
”Vi tror att vi skapar bäst värde genom att utveckla de här bolagen så att de får en fin utveckling, och det är huvudfokus. Sen utesluter inte det att vi kan lägga till något bolag eller gå ur något bolag”, säger Helena Stjernholm.
Att ha en så pass fokuserad portfölj ser inte Stjernholm som en risk, då det innebär att det känner innehavsbolagen mycket väl. Men självklart kan det innebära stora...
About Helena Stjernholm
In an October 2021 interview, Helena Stjernholm stated that Industrivärden's primary focus is on developing its seven portfolio companies, which she said creates the most value. She noted that while the company may add or divest holdings in the future, its main priority remains its current investments. Stjernholm said she does not view the concentrated portfolio as a risk, as it allows the company to know its holdings well. Stjernholm also discussed sustainability, saying that as a long-term investor, the company must ensure its portfolio companies understand and manage such issues. She described the economic outlook as difficult to assess, citing uncertainty around inflation expectations and the eventual phasing out of stimulus measures. While she said the stock market remains an attractive investment option, she added that it is likely to remain volatile.
Transcript (47 segments)
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Interviewer0:02
Industrivärden's most recently reported net asset value represents an increase of 8% since the turn of the year. During the same period, the Stockholm Stock Exchange's total return index has increased by 24%. We will discuss this today with Industrivärden's CEO Helena Stjernholm. But also about sustainability. What does it mean to be an active owner when it comes to sustainability? Welcome to EFN Marknad!
Welcome, Helena Stjernholm. Great to have you here. How much of your time do you spend reading up on sustainability and such?
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Helena Stjernholm0:50
I spend a lot of time reading. We are major shareholders in seven portfolio companies. I myself sit on the board of three of them. Much of my job involves getting into issues concerning these companies. Including sustainability.
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Interviewer1:07
You talk a lot about sustainability. But when you analyze companies, do you delve specifically into... How important is that issue?
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Helena Stjernholm1:18
Very important. We have a long-term perspective, a long-term investment horizon. If you want to maximize profit and investment in the short term, you might possibly disregard it. But if you have a long perspective, you must ensure that the companies can understand and manage these issues. We devote a lot of time and analysis to that.
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Interviewer1:42
Before we continue, for those who don't have a full grasp of Industrivärden, let's look at what holdings you have. This is a cross-section of classic Swedish large-cap companies on the Stockholm Stock Exchange. You have owned them for a very long time. It has looked the same... In the spring you sold SSAB. How does your long-term investment horizon contribute to sustainability?
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Helena Stjernholm2:13
If you are an owner for a long time... We have been owners in these companies for a long time. Many of them have been operating for over 100 years. Can you then not adapt your operations to the conditions that exist, the changes that occur in society? Today we have an increased focus on climate and other sustainability-related issues. It goes hand in hand—the long-term investment horizon and sustainability focus.
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Interviewer2:45
So concretely in Industrivärden, how do you contribute in your portfolio companies to thinking about the climate and working conditions and so on?
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Helena Stjernholm2:56
First, I want to be careful to say that for us, with our investment strategy, which involves having significant ownership stakes in a small number of companies, and as you say, in different industries, it is extremely important to get into each company's threats and opportunities, for example in terms of climate. There is no one-size-fits-all recipe. You cannot treat a vehicle manufacturer like Volvo the same as Handelsbanken. It is very important to look at each specific case and form an opinion on what is material. How do you get the greatest impact? What are the biggest threats and opportunities from a sustainability perspective?
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Interviewer3:42
Can you... Can you get down to the detail level and influence which batteries should be used? Or whether batteries should be used at all?
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Helena Stjernholm3:55
We influence at different levels. The formal bodies are the nomination committee. There we influence by being involved in appointing boards or preparing the election of boards before the general meeting, so that they have a good composition and further develop the company. Naturally, the board is a very important forum for these issues. That is where many of the strategic discussions take place. Sustainability is included. It is very important not to separate major strategic issues from sustainability. For example, battery use, hydrogen, or whatever it may be as a means of propulsion, is a strategic question to be able to win in a competitive market in the future. So we work a lot with the board. We also have a direct dialogue with the companies and various people, where we express our views on different types of issues.
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Interviewer4:50
Can you give an example?
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Helena Stjernholm4:50
When we have a direct dialogue?
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Interviewer4:54
When you have given concrete advice that has led to an improvement?
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Helena Stjernholm5:00
I don't want to point out anything specific. There are other owners... I sit on the inside of the board in some. It becomes a debate and discussion. It is a very good dialogue with the companies in terms of them also asking us. We see a much broader palette. They probably ask other owners too. Then you get this dialogue. The stakeholder analysis is important when it comes to sustainability.
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Interviewer5:27
What is the most important sustainability issue right now?
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Helena Stjernholm5:30
It depends on which business you look at. The climate in general has increased a lot in importance. It is something we all have to relate to. But there can be different issues in different businesses that are the most material.
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Interviewer5:50
Is Industrivärden looking for new investments right now?
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Helena Stjernholm5:55
Our strategy focuses on significant ownership stakes in a small number of companies with a long investment horizon. That is the main strategy. We believe we create the best value by developing these companies so that they have a good development. That is the main focus. That does not exclude adding a company or exiting a company.
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Interviewer6:22
Are you looking right now?
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Helena Stjernholm6:25
It is always ongoing... One thinks. We look at the companies we have and challenge them. Our main focus is on the existing portfolio.
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Interviewer6:38
We have received a number of viewer questions for you that we will take shortly. But first, let's look at how you have performed. Your most recently reported net asset value is 295 kronor per share. An increase of 8% since the turn of the year. Here we have a graph showing the investment company index, IB-index, which follows the investment companies on the Stockholm Stock Exchange. We won't directly talk about how Industrivärden's stock price has performed. But how do you relate to the net asset value discount? How important is it? What do you think about it?
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Helena Stjernholm7:29
We focus on increasing the net asset value. Growing it over time. That is our main focus. That is where we can influence. Then the stock market sets a price on our share. Sometimes at a discount, most often at a discount. It has varied over time. Our focus is the net asset value.
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Interviewer7:50
It seems that the discount has come down for many investment companies on the stock exchange. Is that a trend?
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Helena Stjernholm8:00
There is statistics going back a long way. In some periods the discounts have increased and decreased in other periods. A number of investment companies even had a premium. It varies a bit over time. The important thing is to focus on growing the net asset value over time.
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Interviewer8:21
If you look at your development, it can move quite a lot in periods. You have seven holdings today. Is that a problem?
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Helena Stjernholm8:29
You are absolutely right, with the strategy we have with these seven holdings today, some have quite a large weight in the portfolio, it is clear that we by definition, given our strategy, get somewhat larger swings. Sometimes we outperform and sometimes we underperform compared to the index. You have to live with that. The important thing is to show that over time you can develop the companies and increase the net asset value.
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Interviewer9:01
As I said, we have received a number of viewer questions. One question that has come up is Fredrik Lundberg's role in Industrivärden and the importance of his opinion for whether investments are made or not. That no new investments are made, is it you or he who decides that?
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Helena Stjernholm9:24
There is a very clear division of roles. He is chairman of Industrivärden. I am CEO. We are eight people on the board. Strategic issues, such as our strategy with a focus on a few companies and a lot of focus on creating value by developing them, have been decided jointly by the board.
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Interviewer9:49
If we bring back the picture of your holdings... Volvo and Sandvik are your largest holdings. With the time we have behind us, is there a risk in being so heavily weighted in those industries?
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Helena Stjernholm10:06
If you take a step back. We have known these companies for a long time. We have had them in the portfolio for a long time. It is quite few companies compared to other investors who have very many. That means we know them well, which in turn reduces the risk somewhat. But it is clear that in periods, if you look at historical statistics, the larger holdings affect our performance. But it is not a risk per se.
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Interviewer10:37
Can you think that people like me, analysts or stock buyers/owners, put too much weight on that? Thinking about... About the portfolio composition? Yes.
That you get questions about it moving a lot in periods because these seven portfolio companies... It gives a very large swing if it moves in one direction or the other.
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Helena Stjernholm11:08
That is a natural question. When we report, it is natural to ask. Most people understand that with such a portfolio composition, this pattern emerges. Then we get very different periods.
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Interviewer11:21
Now that there has been a component shortage... You have long experience and know the companies. With these seven legs you stand on, can you personally become worried? If you go back to last autumn when you didn't know where it was going. How was it then?
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Helena Stjernholm11:43
It is hard not to think about the companies and their challenges and opportunities. But now there is strong demand in many segments. But growth is hampered by supply. Component shortage. We hear about semiconductors, but there is also a shortage of other things. In some parts of the world there is an energy shortage. We have a labor shortage. Supply chains are in many ways somewhat disrupted. It is tough for many companies. That has been seen in the reporting period. But the companies are used to that in terms of the business cycle going up and down. But during the second quarter of last year when the pandemic hit with full force, I felt a greater concern. Then it was more external factors. How long will it go on? There were restrictions in countries where some of our companies had production. We couldn't keep open. That was a greater concern than now.
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Interviewer12:42
It is starting to ease.
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Helena Stjernholm12:45
Yes. For many companies, both in our portfolio and others with long supply chains, these are problems they have seen before, even if they are quite tough right now.
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Interviewer12:58
Industrivärden and Handelsbanken have a long experience with each other. You still have your ownership in Handelsbanken. Handelsbanken distributed Industrivärden to its shareholders. How is your relationship today?
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Helena Stjernholm13:12
It is an important holding for us. We think it was good that they distributed those shares. Good in that they reduced their shareholding in this foundation. That makes the capital situation more stable going forward. As an active owner in the bank, we thought it was good.
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Interviewer13:34
A viewer question that has come up is: What do you think about the stock market going forward?
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Helena Stjernholm13:42
That is a good question. We have lived for a long period with low interest rates and large stimulus. Especially after the pandemic. That makes it difficult to find alternatives. The stock market is an attractive investment alternative. I still think so. But right now the economy is a bit difficult to assess. Many of the issues also drive inflation expectations. There is quite a large uncertainty about where it is going. That makes it a bit more shaky now. And at some point the stimulus will be phased out. We should be prepared for it to be a bit shaky, but fundamentally I think the stock market continues to be a good investment alternative.
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Interviewer14:33
You have tentacles in many different industries and companies. So it is hard for you to point out a winning industry going forward. But finally, do you personally invest in stocks?
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Helena Stjernholm14:50
I do, although there are a number of restrictions on what and when I can trade.
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Interviewer14:58
Is it both outside and on the stock exchange?
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Helena Stjernholm15:04
Yes, but mainly on the stock exchange.
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Interviewer15:04
Thank you very much for coming, Helena Stjernholm. On Friday, EFN Marknad is back again with something that some call the stock market's horoscope. It is about technical analysis. Don't miss it. See you later!