Kraft Norge returned 6.62% in March and is up 15.75% so far this year.

After the US and Israel launched military operations against Iran, and the resulting closure of the Strait of Hormuz blocked around 25 percent of the world’s oil transport, oil prices rose by more than 40 percent to USD 103 per barrel. The European gas price rose by as much as 60 percent during the month. This contributed to a very strong performance for companies in the energy sector. Equinor was the best-performing share in the portfolio in March, after rising almost 50 percent. Vår Energi and Aker BP also contributed very positively to the fund’s return. “We were relatively well positioned in this segment before the upturn began, but have now chosen to reduce our exposure somewhat. We have sold out of our Energy segment completely. Although there is still a great deal of uncertainty about the way forward, finding solutions to reopen the world’s most important maritime bottleneck for oil transport is undoubtedly of great global interest. Any reopening of the Strait of Hormuz will ensure that both production and transport of oil eventually return to normal, and will also contribute to significantly lower oil prices.

Developments in the industry, materials and supplies categories were more mixed. Kongsberg Gruppen, Yara and Norsk Hydro all contributed positively. Tomra, Borregaard and Bonheur corrected slightly downwards.

Within technology and communication services, there were no companies that stood out to any great extent. We have chosen to buy into Vend Marketplaces, following weak share price performance this winter. We think the fear of disruption from artificial intelligence in the company’s business areas is overestimated and that the stock is attractively priced. Link Mobility Group is also a new stock in the portfolio, also after weak stock market performance over time. We like the combination of double-digit earnings growth and a strong balance sheet, and believe the valuation is too low at current levels.

Of the consumer goods companies, Austevoll stood out in a positive direction, while the other seafood companies in the portfolio did little this month. Orkla corrected slightly downwards in March.

Financial companies also corrected slightly downwards. We have recently bought some shares in Gjensidige, as we like the company’s strong market position in its segment, combined with its pricing power over its customers. In an insurance market characterized by inflation, the ability to adjust premiums without losing customers is crucial to maintaining margins.

The reporting season for companies’ first quarters is just around the corner, and this time we are entering it with greater uncertainty than we have seen for a long time. The war in the Middle East is undoubtedly driving inflation, and it will therefore be exciting to see how this affects companies’ earnings. Kraft Norge’s portfolio is well diversified across sectors, characterized by mature companies with strong market positions in their segment. The selection process also emphasizes that the companies have a solid balance sheet and positive cash flows over time.

Sincerely

Stein Frode Aaseng