Bad years – an opportunity to make even better returns

Portfolio manager Petri Deryng, who spoke at PYN Elite’s investor evening in Helsinki on April 17, challenged his listeners to look at weak stock market years from a different angle. “The result of bad years is that the portfolio manager has the opportunity to make even better returns in the following years.”

Deryng reminded that the rapid declines in stock prices have given PYN Elite several opportunities to acquire good companies in the portfolio at a low price. He says that the share block of the airport company ACV would hardly have been offered to PYN Elite without the sell-off due to the corona crisis in April 2020. ACV’s share in the fund’s portfolio is now 8.1 percent (April 10, 2023).

Similarly, last fall’s sell-off in Vietnam pushed the portfolio manager to look for new target companies. “I told our analysts in November that share prices are at an absolutely crazy level, and now everyone needs to think about buying recommendations.”

PYN Asia Research analyst Maggie Yi, who follows the banking sector, suggested that Sacombank (STB) looks attractive. The portfolio manager was aware of the bank, but it had not been considered a target. “I knew that the bank had struggled with the liabilities from the era of the old management. Now they were getting rid of them, and the bank had sold the assets it had taken over.”

After this, the fund started to buy STB, and now its share in the portfolio is ten percent (April 10, 2023). Just before the PYN Elite investor evening, STB published that it is targeting significant earnings growth this year.

“PYN Elite’s three-year return is 82 percent, which means we have outperformed the VN-Index index (+39%). The stock market’s volatility has been a good opportunity for us.”

The investors’ evening was organized in the former main building of the Helsinki School of Economics. Almost 500 people were present in the ballroom, and there were a couple of hundred people following the stream during the broadcast. The CEO of PYN Fund Management, Eino Laitinen reminded that sell-offs create opportunities not only for the portfolio manager but also for those who invest in the fund.

“During the financial crisis, the NAV of the fund declined by 66 percent compared to its previous highest value. Because of the covid-19 crisis, NAV crashed by 39 percent. Last year’s autumn dip was also severe, -42 percent compared to its previous highest value,” said Laitinen.

After the crises, there have been similar significant changes when stock prices go up again. For example, after the lows of the financial crisis, the PYN Elite NAV jumped by 130 percent in a year. During the coronavirus dip, the NAV was at its lowest on the subscription date in March 2020, and those who subscribed then doubled the value of their investment in the following year.

Laitinen stated that PYN Elite now has over 5,000 investors, and 878 new investors joined last year. Laitinen was particularly pleased with the fact that the fund has had 350 investors for over 20 years.

Important information regarding the text and the Fund

The attached publication is marketing material and should not be regarded as a recommendation to subscribe or redeem units of the PYN Elite Fund. Before subscribing please familiarize yourself with the Key Information Document, the Prospectus and the Rules of the Fund. The material presented in this text is based on PYN Fund Management’s view of markets and investment opportunities. PYN Elite Fund (non-UCITS) invests its assets in a highly allocated manner in frontier markets and in a small number of companies. This investment approach involves a larger risk of volatility compared to ordinary broadly diversified equity investments. The value of an investment may decline substantially in unfavorable market conditions or due to an individual unsuccessful investment. It is entirely possible that the estimates of economic development or a company’s business performance presented in this presentation will not be realized as presented and they involve material uncertainties.