KKR, Bookings Holdings, Moody's & shifting towards large-cap stocks.
Sold
I sold 400 of my remaining shares in Elektroimportøren at 79 kr for a total profit of 1784.17kr ($202.89), including dividends that I’ll be receiving at the end of August. The companies future prospects look good and the valuation is certainly not that expensive at EV/NOPAT 17.40.
I sold my entire position in Kambi consisting of 320 shares at 240 kr per share, realizing the loss of 42 501 kr ($4830). It feels good to get rid of the mistake of buying a very interesting stock with limited history, but great growth.
I scaled back my position in Evolution, from 110 shares back down to the 90 shares which I hold in my Nordic account. My cost basis is 800 kr per share and I have a 73.8% return on those. The stock is currently at a 12.1% weight of my portfolio, so I still hold a sizeable amount in Evolution. With my 6.9% in Kindred, the gambling sector is 18.9% of my portfolio, and that’s not something I’m thinking about increasing in the near future.
Scaled-down my holdings in Bouvet from 802 shares down to 500 shares. This is consistent with my strategy of owning larger companies with more liquid shares. As of 14.08 my relatively illiquid stocks AF Gruppen and Bouvet account for 6.4% of my portfolio.
KKR
I bought 30 shares at $66.32 of this highly regarded alternative asset manager. The company has had pretty extraordinary growth in assets at a CAGR of 17% in the period 2005-2020. My investment in the company is only 1.6% of my portfolio, which leaves me the opportunity to increase in the future. I’m not rushing in to attain a decent position, but I’m trying to be more patient this time.
This is another play on real assets becoming more attractive to yield-searching investors. Pension funds, in particular, have a massive problem. Government bonds are turning negative and this forces them to take on more risk to reach their “customers” requirements. Increasing exposure to riskier investments like stocks or private equity. In addition, real assets look interesting since they provide long duration and stable cash flows. They could hand their money over to BAM and KKR to invest in infrastructure projects or real estate, in addition to their private equity, credit, and public market offerings.
Even though the company’s share price has increased by 360% in the last 5 years, the multiples look attractive. Price/earnings multiple of 17.6 based on next year’s estimated results.
Reputation in this business is everything and based on the companies expectation of raising $100 billion in 2021/22 clients, leaves an immense trust in the company’s ability to provide a good return at attractive levels of risk.
Booking holdings
I recently wrote a post about the company, and after researching some more about the company I decided to buy one share at $2023 per share. Only 1.8% of my portfolio, but it would allow me to increase my position in the future.
Analysts are expecting a recovery in earnings in the next couple of years. With the company earning $126 in earnings per share in 2023, and a tad more in 2024. If they're right it would equate to a P/E of 16. Not that bad in my opinion of a company with an average ROE of 31% in the last decade, 27-30% operating margins, and from 2010-2019 increased revenue per share from $62.8 to $364. This equates to a CAGR of 21.56% in revenues per share. The future will most likely not experience a similar growth rate, but the company is in my opinion trading at a decent valuation.
The business was showing how resilient it was in 2020. Earnings were positive at $1.2 EPS, but a large decline from $111 in 2019. When looking further down the value chain in the travel industry like for instance Carnival corporation, which lost $13.2 per share in 2020. This was equivalent to the earnings in 2019, 2018, 2017, and 24% of 2016 EPS for the company. I know at least where I would have my capital if something similar were to happen again. Booking Holdings has a lot of variable costs, which they could reduce if demand were to fall again.
Moody’s
Moody’s metrics are pretty outstanding. 36% operating margins 26.7% return on tangible assets in the last ten years as well as an 11.8% CAGR in revenue per share in the same period. Warren Buffets’ childhood consisted of memorizing Moody’s manual. He obviously liked the stock as well as their services/material, since he holds 13.2% of the outstanding shares.
I bought 7 shares for a total of 2.2% of my portfolio. The stock is definitely not cheap, but being the standard of credit rating along with S&P Global and Fitch, I bet that the Oligopoly will continue to prosper in the future.
Sources:
Infront (estimates
Borsdata.se (stats)
KKR’s Investor day and annual letter 2020
Disclosure!!
Always do your own research before investing in a stock!! No one knows whether a stock will go up, down, or sideways at any given time, and I’m no exception to that rule. I hope that you enjoyed this post but It should not be considered financial advice.