Catella long short equity manager Jonas Wikström discusses management changes
Jonas Wikström, manager of the Catella Nordic Long Short Equity fund, has discussed the changes over the summer, which saw him take sole responsibility from the previous co-managed approach alongside Sven Thorén.
After two and a half years jointly managing the fund, you are now the sole manager. Will this mean any immediate changes?
The fund’s strategy and risk level are already mapped out and will not change as a result of me becoming the sole manager. It will be easier for me to maintain complete control of the fund’s exposure and risk. Thanks to the fact that we work with a team spirit at Catella I will still be able to capitalise on the breadth of knowledge in the management organisation and on share investment ideas.
Can you comment on the stock market at the moment?
Stock prices have risen about 14% so far this year, while earnings estimates have come down by about 10%. This has made the stock market valuation more expensive in terms of aggregate p/e. For the stock market to be fuelled in its continued gains, the outlook for companies will have to improve, the revision trend will need to shift and earnings estimates will have to be upwardly revised.
Do you have any examples of “long” companies and why you like them?
We have been well rewarded for some of our oil-related positions in Norway recently, and I still see potential in, for example, Sevan Drilling. The conflict in Syria has not only led to higher oil prices, but also to increased interest in oil-related stocks.
The fund has continuing exposure to Micronic Mydata. It is our hope and assessment that the company will begin to distribute some of its SEK600m in cash to shareholders, and that this information be given before the year end.
Rautaruukki has been the fund’s most profitable position in the latter part of the summer, and it has made a significant contribution to earnings. Despite the relatively rapid price rise, I see further great potential in the company. Rautaruukki has managed to make money and generate decent cash flow despite very low capacity utilisation. The market for standard steel remains under pressure in Europe, but there are some signs of improvement. The company has an increasing share of its sales within special steel, where the market is better than in standard steel.
Can you give some examples of “short” companies and why?
I have recently increased the size of our negative exposure to Assa Abloy. The stock has risen 48% in the past 12 months and the valuation has become too aggressive. Two-thirds of the company is now owned by foreign institutions, which creates a downside risk when they decide to start abandoning the stock.