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Winners and Losers from WFH Trend

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Stockholm (HedgeNordic) – Just like any other crisis, the COVID-19 pandemic will bring a new set of corporate winners and losers in the business world. Seasoned fund manager Magnus Angenfelt (pictured), who runs equity market-neutral hedge fund Chelonia Market Neutral, discusses some winners and losers of the pandemic on investment podcast Finansräven.

Angenfelt, who co-founded Brummer-backed market-neutral hedge fund Manticore, reckons that Byggmax, a do-it-yourself (DIY) retailer of construction materials in the Nordics, is well-positioned to benefit from the COVID-19 pandemic. According to Angenfelt, a house “is not only something one should just live in but also increasingly serves as a workplace,” which will encourage individuals to invest more in their houses.

“The trend of working from home may have a lasting effect on Byggmax’s business.”

The trend of working from home “may have a lasting effect on Byggmax’s business,” says Angenfelt, who served as a portfolio manager and, from time to time, CEO and CIO at Manticore during the period of 2000 until 2011. “Byggmax also has a competitive advantage, as they are the cheapest construction company serving private individuals. And in addition, a very good CEO in Mattias Ankarberg.”

With working from home becoming the new normal, Angenfelt considers that real estate companies focused on office properties will be worse off as higher vacancy rates could force property owners to lower rents. “Real estate is something to be careful about on the long side,” says Angenfelt in a Finansräven podcast. “If my assessments are accurate, we have a vacancy rate in offices across Stockholm of four percent,” says the head portfolio manager of Chelonia Market Neutral. “The rule of thumb is that at over five percent, there will be a rent drop,” he continues.

“If you look at the surveys done on how many people will be sitting at home even after the pandemic, the demand for office properties will probably fall a bit.”

“If you look at the surveys done on how many people will be sitting at home even after the pandemic, the demand for office properties will probably fall a bit,” according to Angenfelt. The most leveraged real estate companies face the highest risk of poor stock market performance. “One can find the big losers among those that have the highest amount of debt and have office properties in big cities,” reckons the fund manager, mentioning Klövern as an example. Other real estate companies at risk, according to Angenfelt, include companies with high exposure to physical retail, such as Atrium Ljungberg and Citycon.

“A large part of these stocks [richly-valued growth stocks] could be overvalued, which can lead to unpleasant surprises.”

Angenfelt, an avid proponent of GARP (growth at reasonable price) investing, recommends investors to be skeptical about richly-valued growth stocks. “A large part of these stocks could be overvalued, which can lead to unpleasant surprises,” he says. “The risk is the possibility of a small misstep, and the growth rate falls from 40 to 20 percent,” he points out. The group of high-growing companies includes many names that are overvalued, according to Angenfelt.


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Eugeniu Guzun
Eugeniu Guzun
Eugeniu Guzun serves as a data analyst responsible for maintaining and gatekeeping the Nordic Hedge Index, and as a journalist covering the Nordic hedge fund industry for HedgeNordic. Eugeniu completed his Master’s degree at the Stockholm School of Economics in 2018. Write to Eugeniu Guzun at eugene@hedgenordic.com


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