Manager Marius Borthen Smashed the Stock Market – He Has Fold the Fund – E24

Blueberry Capital returned 8.1 percent in March. Therefore, the fund returned 14.2 percent in the first quarter, while the main index on the Oslo Stock Exchange returned 8.7 percent.

This means that one share in the fund has increased five times in value since its inception, from NOK 5,000 to just over NOK 26,000.

– It’s incredibly fun to multiply it by five. I’ve been waiting for it for a long time, says manager Marius Borthen to E24.

Borthen founded Blueberry from the school bench at NHH in 2010 with 15 investors in the team. Since then, the fund has risen 422 percent.

– Now we manage around 200 million. The goal is to reach 300 million. We see that the investment strategy works well with some increased capital and at the same time that we are going to hire someone else, it is good that the fund is growing a bit more, says Borthen.

But Borthen is not limited to trading stocks in front of the PC screen. When E24 calls on Good Friday, you are looking for a store outlet in Nordmarka.

– I went out to the country at Easter on impulse. When you work in the financial market, everyday life is characterized by being extremely noisy, says Borthen.

– If you can’t filter what’s important, you’ll make a lot of wrong decisions over time. You can go west for a while, but if you go south, the course must eventually correct itself.

It focuses on banking, finance, oil, and tourism.

Borthen has warned E24 readers that stock market research may be more vulnerable to a correction. The manager now says he has been “very skeptical” of green stocks, which have made up many of the quotes, due to their “very high valuation.”

– There is nothing wrong with companies, but with valuation. It has become a bit euphoric and is very reminiscent of the IT boom in 99. So I prefer to spend my time in more interesting sectors, such as banking, finance, oil and tourism. This is where future winners come in, says Borthen.

On Twitter Borthen writes that Blueberry’s “best ideas” are investments in Bank Norwegian, Eiendomsspar, Cadeler and Kindred.

– We bought Kindred in the fourth quarter of last year because they were much cheaper than the competition. At the same time, they earn a lot of money.

Kindred is a gambling operator, which among other things is behind brands like Unibet and Maria Casino.

– In my opinion, Bank Norwegian is highly valued relative to current return on equity and future growth. At the same time, they will pay dividends and buy back shares. The bank is totally digital and has a very good management. They mark many important factors for a good investment.

In early March, Sweden’s Nordax Bank submitted an offer for Norwegian Finans Holding, which operates Bank Norwegian, but the company’s board of directors deemed the offer too low.

– Perhaps there is also a new offer from Nordax. But Bank Norwegian will likely continue to rise for years to come, with or without a new offering. This is not why we are in stock. But if there is a new offer, the repetition will obviously be faster.

Fear of the fall of the stock market

But Borthen also saw a possible recession on the horizon.

I fear a possible fall in the stock market in the fall, without having to sit down and loudly announce that it will happen. You almost have to take week by week and analyze the news that falls, he says.

– First, historically the market has a very high price. It is an excellent predictor of profitability for the next ten years. However, it says little about whether it will crack now or in two years.

Therefore, he looks at other indicators, such as the number of IPOs and problems, which he thinks are a better warning in the medium term.

– The level this winter has been very high and is as simple as a balance between supply and demand. Eventually, demand becomes saturated and then prices fall.

He points out that fall has often been a bad period historically.

– Especially if there has been a poor performance through August, but most likely not this year. Fall often brings downward adjustments and people become skeptical about the following year.

In March, Blueberry’s share was around 85 percent.

– I was a bit skeptical after the good end of last year, but I have not sold much in shares. The first half of the year is usually very good in the stock market. We know that for the summer there is better news, both with regard to vaccines and the reopening of society.

– What is uncertain is whether the reopening and vaccination will create a “booming” economy by next year. It will be a bit philosophical, but it may be that much of it has already been included in the market price and that there is not much rise from the current level.

– We will probably reduce participation. It’s important to deal with the downsides, says Borthen.

Lost in Tesla gambling

In December, Borthen bet on a price drop at Tesla, but it didn’t exactly go as planned.

The plan was for the stock to fall after Tesla became part of the broad US stock index S&P 500.

But the action skyrocketed and Borthen lost the bet.

– Our Tesla short went to “stop-loss”. We lost 2-3 percent, but that was not a problem. We had a clear strategy for stocks to fall after their inclusion in the S&P 500 Index, but when that didn’t happen, it was important to be clear about the strategy, he says.

– It’s fun to place a few small bets from time to time. The average of the bets is usually very good.

However, in hindsight, Tesla’s stake has fallen and is down 5.35 percent this year.

– The most important thing is to maintain a humble attitude

Borthen maintains contact with the ground despite a good quarter.

– The most important thing is to maintain a humble attitude. We can be right and we can be wrong. What we do know is that strong companies with good management and strong operations, and that are also valued well, often perform well even if the market is a bit tough. That is one of the reasons we have been successful in the first quarter.

He believes that it is “extremely important” not to be too skeptical about things if you want to be successful with asset management.

One thing you have spent a lot of time analyzing, but are still unsure about, is inflation over the next 3-5 years. So you’ve tied up half your mortgage at a fixed rate for ten years to position yourself for different outcomes.

– Often something completely different from what you thought happens. So you have to try to adapt.

– As a good friend from the industry told me: “Marius, go up and down.” When I go up, I expect a bad period afterwards. It is important not to take off when things are going well, but not to get too depressed if things go wrong.

– Now I am quite worried about a relapse, but it is healthy.