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In mid-March, the Norwegian high-performance market completely collapsed. The strong depreciation of the krona created a liquidity constraint that forced Norwegian fixed-income fund managers to sell bonds, and in their desperation for cash, bonds from even solid companies sold at deep discounts.
This was the opportunity that the managers of Protector Insurance had been waiting for. For the past two or three years, they had stayed away from the high yield market because they felt that yields were too poor. Instead, they wanted to wait for the opportunity to buy when prices fell, explains Sverre Bjerkeli, CEO of Protector Insurance.
“When the crisis hit the high-yield market, we were ready,” says Bjerkeli.
Bought for 1.5 billion in a week
The situation in the high yield market peaked at 18-19. March, when the crown depreciated so much that the euro cost more than 13 crowns. As a result of the depreciation of the krone, several fund managers who had currency hedging had to commit large amounts of cash as collateral, forcing them to sell bonds.
Then the Protector’s stewards attacked.
– Some were forced to sell, and then it is possible to make good exchanges. We entered with more than 1,500 million during that week. It is a lot of money and it has started to have an impact, ”says Bjerkeli.
Since the beginning of April, Protector’s investments have generated a return of around NOK 180 million and, according to Bjerkeli, more than 100 of them come from the fixed income market.
Hit the bottom perfectly
So far, it may seem like the Protector team hit the bottom of the high-performance market perfectly. Since the dramatic week in mid-March, the high-performance market has increased about eight percent.
On Wednesday night, Protector announced a negative result of NOK 385 million for the first quarter of this year, which analysts said was expected given the sharp drop in the stock market. While Protector’s equity portfolio fell 28.8 percent, the fixed-income portfolio fell just 1.1 percent.
The reason for the low decline in the fixed income portfolio is that Protector has been overweight in highly secure fixed income securities because they have thought that the high yield performance has been too poor.
“We were well positioned and we responded quickly,” says Bjerkeli.
He was one of the few buyers.
Thanks to a thorough analysis beforehand, they were able to quickly talk about bonuses at the companies they believed in the most.
– The bonds of companies such as Mowi, Bonheur, Scatec Solar and DNB had a 20% lower price in a few days, without any of the fundamental conditions in our opinion being particularly affected, says Bjerkeli, who confirms that these are some of the companies they have. joined.
Several credit managers DN spoke to this week said it was almost impossible to find buyers.
– We were probably one of the few companies that bought something. We note that we account for large parts of the volume, says Bjerkeli, adding:
– We do not know the facilities for a long time, but at the moment these investments seem very successful.
Paper loss of 110 million.
Bjerkeli together with his sons and his wife own just under 3.2 million shares in Protector through the company Hvaler Invest. As a result, the family faces a loss of around NOK 110 million in the past year, as Protector’s share price has fallen by more than 50 percent.
– I’ll take it with a smile. I am so lucky to have bought the first shares for just over a penny when we started the company. I haven’t sold myself, so this is a waste of paper, says Bjerkeli.
In the spring of 2017, Bjerkeli defeated his wife and bought Protector shares for NOK 24 million. In an announcement from the stock exchange in April, he stated that exactly the same number of shares would be sold when the price was NOK 100. It was because his wife wanted to be debt free. Half a year later, the shares reached a preliminary peak of NOK 95.
– What does the wife say now, when stocks are reduced to 30 crowns?
– The lady anticipates that the course will reach 100 crowns, so I said that something will be delayed, says Bjerkeli with a smile.
Believe at the turning point
Protector’s insurance business itself was seven percent better than the first quarter of last year, and normally the first quarter is the worst.
– Therefore, we believe and hope that we are at a turning point, says Bjerkeli.
He is not the only one who believes in promotion. Protector rose seven percent on the Oslo Stock Exchange on Thursday, after a buy recommendation from several analysts.
Bjerkeli says her business is not yet particularly affected by the coronavirus. He explains that there may be injuries that could lead to increased expenses due to the corona virus, but that this will mostly relate to travel insurance and the kind of things Protector doesn’t deal with very much.
Insurance is often viewed as a countercyclical industry, so lower economic speeds should normally be positive.
– When the wheels move slowly, insurance tends to improve, he says. (Terms)Copyright Dagens Næringsliv AS and / or our suppliers. We want you to share our cases using a link, which links directly to our pages. Copying or any other use of all or part of the content may only be made with written permission or as permitted by law. For more terms see here.
