May 22, 2022

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- Deeply disappointed in myself - E24

– Deeply disappointed in myself – E24

Equity fund First Veritas sold its stake in Fjordkraft within two days. – He was not able to absorb reality, says director Thomas Nielsen.

Portfolio Manager for First Veritas, Thomas Nielsen.
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Electricity company Fjordkraft plunged 16 percent to a new low on the Oslo Stock Exchange on Thursday, thus losing a quarter of its market value in two days.

Several shareholders are getting off their cards after being disappointed with the growth and profitability targets announced by Fjordkraft on Wednesday’s capital market day.

Among those who have now surrendered is Thomas Nielsen, director of the First Veritas Fund.

The fund owns just over 1 million shares in Fjordkraft, but has given up everything over the past two days. Nielsen confirms this for E24 after the exchange’s closing time on Thursday.

“Unfortunately, it was a sad story,” Nielsen says.

Adjusted for dividends, the fund is estimated to have lost 56 percent of its original investment, in a period when the Scandinavian stock exchange was up 23 percent.

Nielsen previously mentioned its cost price at around NOK 70, so it made a loss of around NOK 40 million.

In total, Fjordkraft contributed just over three percent to First Veritas’ negative returns during the period. I can’t help but lie down and humbly apologize to the unit owners, myself included, says Nielsen.

Announces a decrease in revenue and operating profit

After rising almost continuously since listing in March 2018, Fjordkraft’s share has now fallen from a peak of NOK 100 in September 2020 to an initial low of NOK 26.1.

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E24 wrote on Wednesday that a toxic combination of ongoing criticism from consumer authorities and volatile electricity prices has put both customer growth and earnings under pressure, and pushed the stock price into a free-fall.

Fjordkraft Group left the first quarter with 663,000 private sector clients, down 29,000 from the previous quarter, and 98,000 below the peak in the third quarter of 2020.

During yesterday’s capital market day, investors expected operating revenues to be 1.6-1.7 billion in 2022 and 2023, respectively, compared to 1.8 billion last year.

At the same time, adjusted operating profit in the same years was estimated at about 500-550 million, down from 586 million in 2021.

Nielsen says he was hoping Fjordkraft would convey better prospects than what happened on Wednesday.

– I’m certainly not disappointed with the company. On the other hand, I am very disappointed in myself, that I could not grasp the facts, despite many good advice and warnings, says Nielsen.

Nothing to appreciate

After former major shareholder BKK sold Fjordkraft at sky-high prices in recent years, Folketrygdfondet is now the largest owner, with 9.6 percent of the shares.

John Fredriksen’s Geveran Trading has been involved since the listing, and still owns two of the three million shares it originally bought for NOK 31 each.

Nordea Norge Verdi Fund has chosen to grow in Fjordkraft over the past year, and is the fifth largest owner with 3.2 million shares.

– First quarter earnings were good compared to expectations, but what is important is the future prospects. When the company reports that earnings will be lower than expected this year, and that 2023 won’t be much better, earnings forecasts for 2022 and 2023 will drop by 20 percent. It’s clearly something that neither the company nor we as shareholders value, Robert Ness, Nordea Norge Verdi’s director, tells E24.

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Fifth largest: Nordea Norway, a valuable company and its director, Robert Ness.

He points out that the price of the stock has fallen by at least the same amount in the past two days and thus it can be said that the view of the stock should not be changed.

“I now certainly think it was a fear that the old estimates wouldn’t hold, and in that sense maybe the stock price shouldn’t drop that much,” he adds.

Are you more likely to buy or sell yourself as it is now?

– We will use future time to analyze the stake more comprehensively, and on this basis we may increase or decrease the holding, says Ness.