Investing in undervalued securities worldwide

Weekly Update 28 February 2022

Share Article:

Russia attacked Ukraine last week. The markets fell in shock on Thursday before recovering on Friday. On the weekend, additional sanctions against Russia were announced, leading to a crash in Russia-linked assets today.

Our portfolio has held up OK in the circumstances, performing in line with $FEZ .

Although in general we expect to lose more than the index when stocks fall, that hasn’t happened this time because we avoided Russia-linked banks.

Banks with exposure to Russia, such as $UCG.MI (UniCredit Commercial Bank) and $GLE.PA (Societe Generale Group), have fallen more than 10% today, and European banks are down 6% on average. The Russian bank $SBERL.L (Sberbank of Russia) is down 70%, illustrating the scale of losses the wrong picks can cause.

Of the banks in our portfolio, only $SAN.MC (Banco Santander SA) is down around 6%, while the rest are doing better than the European banks index. Santander is a GSIB (Global Systemically Important Bank), so the markets feel it is exposed to any global problem, although it doesn’t have material direct Russian exposure on its books.

The war between Russia and Ukraine is now going to cause an economic slowdown. Rabobank estimates that 2023 growth will fall 1.1 percentage points in Europe, and 0.6 percentage points in the US.

In Rabobank’s view, no recession is expected, however.

We do not have any strong view on the market at the moment. The positives are that:

 (1) geopolitical news does not usually move the markets for long and should generally be ignored;

(2) the economic slowdown may put the Fed on pause;

(3) there is plenty of pessimism around.

The negatives are that:

(1) Russia may choose to escalate the conflict further;

(2) the Fed may choose to ignore geopolitics and get tough on inflation;

(3) the market decline has been rather orderly, and we do not sense any real panic.

Our approach in this uncertain situation is to hold our positions, while making minor adjustments to manage Russia-related risk.

???? ??????????? ???
@triangulacapital +0.3%
$SWDA.L -7.6%

????????? ???????
$DG.PA (Vinci S.A) was replaced by $FB (Meta Platforms Inc) in order to reduce the European exposure of the portfolio.

??????? ?? ??? ????
“Is It Time to Sell Stocks?”

-Why not try to avoid situations like Russia/Ukraine by selling before the fall and buying back afterwards? The problem is that it’s very difficult.

– Indeed, the average professional can’t do it. The article quotes a Morningstar study that says, “The failure of tactical asset allocation funds suggests investors should not only stay away from funds that follow tactical strategies, but they should also avoid making short-term shifts between asset classes in their own portfolios.”

– The reality is not quite that simple, as there are a few top traders who appear to be able to time the market. For example:

– For 99% of us, though, the research suggests it’s better to buy and hold.

Share Article:

Leave a Comment

Your email address will not be published. Required fields are marked *


eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFD assets.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

eToro (Europe) Ltd., a Financial Services Company authorised and regulated by the Cyprus Securities Exchange Commission (CySEC) under the license # 109/10.

eToro (UK) Ltd. is authorised and regulated by the Financial Conduct Authority (FCA) under the license FRN 583263.

Your capital is at risk. Other fees may apply. For more information, visit

Pietari Laurila is not a registered investment advisor and does not offer investment advisory, fund management or wealth management services.

Triangula Capital is a brand name, not an incorporated entity.

This page is provided for information purposes only. It is not a recommendation to copy the Triangula Capital strategy or to invest in any fund or security.

2009-2020 performance figures are from Pietari’s personal Interactive Brokers account. They are time-weighted returns calculated in accordance with the Global Investment Performance Standards (GIPS).

From 2021, performance is calculated by eToro.

Past performance is not indicative of future results.

Track Record

It is often said that past performance is not a guarantee of future performance.

That is true. But there is also some evidence indicating that portfolios that performed better in the past, do perform better in the future.

“[…] top-decile prior-alpha funds produce annual future alphas of about 150 bps, net of fees” Source

Risk warning: That is only one study. In general, past performance is not indicative of future results.

Aligned Incentives

Pietari invests the majority of his net worth in the strategy. This ensures that his interests are aligned with investors who copy the strategy.

“Funds with high-incentive contracts deliver higher risk-adjusted return, and the superior performance remains persistent. The top incentive quintile of funds outperforms the bottom quintile by 2.70% per year” Source

Risk warning: Pietari holds accounts with multiple brokers and may therefore have a conflict of interest when deciding which accounts he should trade in first.

Unconstrained Investments

The strategy has fewer constraints on its investments than traditional mutual funds.

The strategy portfolio can be invested in stocks, bonds or cash and these allocations can vary over time.

Compared to traditional mutual funds, the strategy also:

  • holds fewer securities
  • trades more
  • avoids following the index

Each of these points has been shown to be an important predictor of portfolio performance.

“We […] find that portfolio concentration is directly related to risk-adjusted returns for institutional investors worldwide” Source

“A one-standard-deviation increase in turnover is associated with a 0.65% per year increase in performance for the typical fund” Source

“We find that truly active funds significantly outperform closet indexers. Further, we find that the truly active funds are able to outperform their benchmarks on average by 1.04% per year” Source

Risk warning: Concentrated portfolios with few positions can suffer large losses if bad news arrives about any of the companies in the portfolio.

Cheap Stocks in Cheap Sectors

The strategy invests in geographies and sectors where values have collapsed due to macroeconomic problems.

Within these geographies and sectors, the strategy overweights stocks that trade at low valuations on measures such as price-to-earnings or price-to-net asset value.

Every stock in the strategy portfolio must also be a good company, with no obvious red flags or long-term threats to its business model.

The aim of the strategy is to maximize returns, even if this means taking more risks than usual.

Risk warning: The strategy portfolio tends to be concentrated in risky stocks, which means that its losses in any market downturn will likely exceed those of the market index.