The Man Behind the Best-Run Swedish Fund Reveals His Top Picks
(Bloomberg) -- The man running the best-performing Swedish stock fund says he expects to continue doing better than his peers by betting on manufacturers.
Gustaf Sjogren, who manages the Norron Active fund (one of five in the $1.5 billion Norron Asset Management group) says names like Atlas Copco AB, Volvo AB and Trelleborg AB are the best bets given their potential to benefit from an economic upswing.
Norron Active Manager Likes Atlas Copco; Volvo Still ‘Cheap’
Sjogren, who focuses on the Nordic market, says overall returns this year are likely to be modest, but the stocks that rely on a recovery in global manufacturing are set to do better.
“This is a longer lasting upturn than many people believe,” Sjogren said in an interview at Norron’s Stockholm headquarters.
“It’s not until the boards make the final, stupid investment decisions that we reach the tipping point, and that hasn’t happened,” he said. “I think it’s too soon to cry wolf.”
The fund invests in 20 to 25 companies. Sjogren doesn’t really care about a company’s size or sector, and has tended to invest mostly in Sweden. Since being created in 2011, the fund has consistently outperformed peers and has the best returns in its category on a 3-year and 5-year horizon. Over the past year, it returned about 13 percent. Its three-year return is just over 41 percent.
Sjogren says he’s found industrial companies that have done better than the rest of the market. He also says he’s not concerned about excessive valuations, because price-to-earnings ratios are lower than they were a year ago.
“Atlas Copco is a good example of an ’expensive’ company in terms of valuation,” Sjogren said. “It’s a very well-run” business, and as mining companies expand underground operations, they will need more drill rigs. “There are two main suppliers -- Atlas and Sandvik -- so I think they will benefit from that capex boom for some time ahead.”
Make or Break
Sjogren recently added ABB Ltd. to his fund’s portfolio. He thinks the Swiss manufacturer, which has a secondary listing in Stockholm, could see demand for its industrial robots increase.
“This is a make or break year, and if they succeed the share can gain some 20 percent,” he said. “That’s worth taking a bet on, as I don’t feel the downside is that big.”
Norron Active manages 1.75 billion kronor in assets, and Sjogren tries to squeeze the most out of his investments by jumping on short-term market moves. That includes reacting to market sentiment, even if he doesn’t agree with it.
“If everyone goes on about how they should come down, you may have to top-slice a bit and follow the trends,” Sjogren said. “Of course, I try to be a bit street-smart.”
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