In the current month, a lot has happened again - the rebalancing in my value and momentum portfolio is also through. This time there are actually two companies from the DACH region and I have learned something new: Salzgitter produces "green" steel - exciting, but in my opinion still expandable.
As always, you can read most things directly here in the post at getquin. Here is my current blog post about it:
https://www.valueinvestments.ch/vermoegensverwaltung-estoppey-value-investments-value-und-momentum-rebalancing-maerz-2023
By the end of February, it was already becoming apparent that the recovery from early 2023 was faltering. Inflation concerns made investors cautious. On Friday, March 10, 2023, there was further bad news from the American market: Silicon Valley Bank filed for bankruptcy. This was a bank that specialized primarily in the financing of startups. Last Sunday saw the next bank closure: Signature Bank in New York had to cease operations. It was originally active in the real estate lending business. Newly, it had many deposits from companies in the field of cryptocurrencies. Both banks had a problem: their business was hardly diversified and so there were liquidity shortages and a so-called bank run, in which many customers wanted to withdraw their money at the same time.
However, the Federal Deposit Insurance Corporation, FDIC - the institution responsible for deposit insurance in the US, so to speak - reacted immediately: it secured the deposits and ensured that these two events did not lead to further problems in the financial system.
On the following Monday, however, stock market prices plummeted across the board. But by Tuesday, everything was forgotten again and we saw sharply rising prices: it was apparently enough that inflation in the USA was in line with expectations and stagnated at around 6%. In other words, for eight months in a row, inflation in the US has been falling. This gives us hope that everything will not become too expensive and that interest rates will not rise too much. Nevertheless, the following week continued volatile and directly on the next weekend there was the next "banger" with the takeover of Credit Suisse by UBS... the largest Swiss bank swallows the second largest - let's see if this goes well in the long term or an even greater cluster risk was created here.
Asset Management - Value & Momentum worldwide
Also in March 2023, the return in the Value and Momentum portfolio has decreased a bit. Today we see an average return of 14.4% and a return since start of 51%. Right now, the portfolio is not really getting off the ground. But the past shows that it doesn't take much for stock prices to rise sharply. No one can know what will happen tomorrow - for example, if you miss a year like 2021 on the stock market, you wipe out the entire return. Therefore: Staying with it is everything and what you need is patience.
Rebalancing Value and Momentum
Again this month I was able to find two companies that are undervalued and meet the strict quality criteria to be included in the portfolio:
Austrian Voestalpine AG, which specializes in steel processing, is a new addition: with 500 group companies and locations in 50 countries, it operates on 5 continents.Salzgitter AG is also active in steel production and processing and has its headquarters in Germany.
Both companies look back on a long history - Salzgitter was even founded as early as 1858. It was not until 1961 that the company was given its current name. Energy prices and steel prices have normalized somewhat, which benefits both companies. Both companies are very favorably valued and have high momentum.
ZIM Integrated Shipping was sold. The Israeli company is still favorably valued, but has completely lost its momentum. Only thanks to the high dividend payouts, the loss was "only" -31%. Which is still well behind expectations. Container shipping benefited from high demand and catch-up potential after the Corona pandemic. However, both have normalized and prices in this segment have fallen.
Asset Management - the newcomers to the portfolio
Salzgitter AG
As the company's name suggests, its headquarters are located in the German city of Salzgitter, which has a population of around 100,000. Salzgitter AG was given its current name in 1961, but the company's roots go back to 1858.
Salzgitter AG is divided into the following business units:
- Steel Production
- Steel Processing: Steel tubes and plate in particular.
- Trading: Own distribution to the end customer.
- Technology: Machines and equipment for filling and packaging of beverages.
As of 2021, Salzgitter AG supplied green flat steel products to plants of Mecedes-Benz AG, for example. The special feature of this is that the CO2 footprint could be reduced by over 66% to 75%: In order to save CO2, Salzgitter invested in the production of hydrogen as early as 2019. The electricity for hydrogen production is supplied by wind turbines on Salzgitter AG's premises. This ensures that the hydrogen is so-called green hydrogen, which is produced with renewable energy.
Voestalpine AG
Voestalpine AG is an Austrian company with its headquarters in Linz. Its foundation dates back to 1938. It was not until 1995 that the privatization took place with the Erstnotierung on the Viennese Börse took place.
The company processes, develops, produces and sells steel products internationally, but primarily in Austria and Europe. The main customers are railroad companies, the automotive industry, the construction industry, mechanical engineering, the oil and gas industry, but also the aerospace and energy technology sectors.
Today, Voestalpine is active in the following segments:
- Steel: Rolled as well as electrolytically galvanized and organically coated steel strip and heavy plate.
- High-performance metals: Special alloys of various kinds.
- Metals technology: Rails and switches, wires, seamless tubes and digital monitoring systems.
- Metal Forming: Special tubes and profiles, precision strip steel products, and ready-to-install system components made from pressed, stamped, and rolled sections.
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