Stockholm (HedgeNordic) – In HedgeNordic’s summer series, “My Favourite Stock,” we delve into the minds of the Nordic hedge fund managers and ask them about their preferred stock picks. Here, Aalborg-based portfolio manager Andreas Aaen of Symmetry Invest introduces his favourite stock.
What is currently your favourite stock in your portfolio? What initially attracted you to it and what makes you keep liking it?
Andreas Aaen: Protector Forsikring ASA. They have delivered a historic compounded annual growth rate (CAGR) of +27 percent, while still today trading at single-digit earnings multiples. We love the management team and the long-term strategy. We have owned it for close to 10 years and enjoy the compounding effect.
What are the key factors or characteristics that make this stock stand out for you?
Andreas Aaen: It has all the ingredients one looks for:
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- Strong growth in a huge market;
- An attractive market position with a defined moat;
- A great management team with great capital allocation skills;
- A cheap valuation.
What is your outlook for the selected stock and its industry?
Andreas Aaen: We think Protector will keep taking market share both in Scandinavia, definitely in the UK, and later on in new markets. We think they can sustain a +15 percent premium CAGR and combined with dividends and buybacks, can keep delivering shareholder CAGR of +20 percent per year.
Are there any anticipated future developments or growth drivers that you believe will impact the stock’s performance?
Andreas Aaen: The great thing with Protector is they just need to keep on track with what they have done in the past and constantly be better. They don’t need some external factor to help them.
Do you have a specific exit strategy in mind for this stock? What will trigger a (partial) exit?
Andreas Aaen: We have owned it for 10 years (besides a brief period in 2018/2019). But we could trim or add to the position depending on the valuation.
Is there anything else you would like to share about the selected stock or your investment approach?
Andreas Aaen: To really understand the long-term opportunity, one needs to look at the past and get to know management.
