Investing in undervalued securities worldwide

Weekly Update 14 March 2022

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Stocks fell last week as the Russia-Ukraine conflict continued to weigh on risk appetite.

We reduced the risk level of the portfolio last week because:

1. The global economy continues to slow down, according to the OECD leading indicator.

2. The Russia-Ukraine war may escalate further, even if we hope it wonโ€™t. Escalation could be either economic (Russia stops supplying gas to Europe) or military (Russia-NATO conflict).

3. High oil prices have historically led to lower corporate profits with a 12-month lag. If oil prices stay high, corporate profits could fall next year.

4. The market is in a negative trend.

We would consider re-risking if there is a resolution to the war. It was in the news today that talks between the parties have resumed.

The portfolio is now invested in high-quality European Industrials, Telecoms, Real Estate as well as global Healthcare stocks.

The new portfolio should be resilient in a recession, although we would still expect to lose money if we enter one. On the other hand, if there is a resolution to the war, the portfolio should gain.

We do not have any positions in the best performing sector of this year, Energy ($XLE), because:

(1) ๐‘‚๐‘–๐‘™ ๐‘–๐‘  ๐‘œ๐‘ฃ๐‘’๐‘Ÿ๐‘ฃ๐‘Ž๐‘™๐‘ข๐‘’๐‘‘

A model by bank Lombard Odier suggests that the fair value of $OIL is $61 per barrel, indicating an overvaluation of 75%.

We are value investors and like assets that trade below their fair values.

(2) ๐‘‡โ„Ž๐‘’ ๐‘๐‘œ๐‘›๐‘“๐‘™๐‘–๐‘๐‘ก ๐‘ค๐‘–๐‘™๐‘™ ๐‘™๐‘’๐‘Ž๐‘‘ ๐‘ก๐‘œ ๐‘™๐‘œ๐‘ค๐‘’๐‘Ÿ ๐‘‘๐‘’๐‘š๐‘Ž๐‘›๐‘‘ ๐‘“๐‘œ๐‘Ÿ ๐‘œ๐‘–๐‘™ ๐‘–๐‘› ๐‘กโ„Ž๐‘’ ๐‘™๐‘œ๐‘›๐‘” ๐‘Ÿ๐‘ข๐‘›

Europe is planning to get rid of its dependence on Russian fossil fuels by 2030, by increasing investments in renewables and energy efficiency.

This will lead to lower demand for oil in the long run.

(3) ๐‘‚๐‘–๐‘™ ๐‘–๐‘  ๐‘ ๐‘ก๐‘–๐‘™๐‘™ ๐‘›๐‘œ๐‘ก ๐‘’๐‘›๐‘ฃ๐‘–๐‘Ÿ๐‘œ๐‘›๐‘š๐‘’๐‘›๐‘ก๐‘Ž๐‘™๐‘™๐‘ฆ ๐‘“๐‘Ÿ๐‘–๐‘’๐‘›๐‘‘๐‘™๐‘ฆ

The fact that Energy equities have returned almost +40% for the year to date does nothing to change the fact that oil is not a sustainable source of energy. Every investor has to evaluate what kinds of investments they are happy to put into their portfolio, even if avoiding certain investments has a cost attached.


Overall, the economic landscape looks uncertain at the moment, and itโ€™s possible to draft plausible negative scenarios. For example, as TS Lombardโ€™s Dario Perkins argues: โ€œOnce inflation is a problem, there is no real chance of a soft landing because the central bank has already messed up.โ€

We are happy to play defence for the moment and wait for either a resolution to the war or a proper panic before re-establishing riskier positions.

๐Ÿฎ๐Ÿฌ๐Ÿฎ๐Ÿฎ ๐—ฝ๐—ฒ๐—ฟ๐—ณ๐—ผ๐—ฟ๐—บ๐—ฎ๐—ป๐—ฐ๐—ฒ ๐—ฌ๐—ง๐——
@triangulacapital -3.3%
$SWDA.L -11.9%

๐—ฃ๐—ผ๐—ฟ๐˜๐—ณ๐—ผ๐—น๐—ถ๐—ผ ๐—ฐ๐—ต๐—ฎ๐—ป๐—ด๐—ฒ๐˜€
Financials $ALLY (Ally Financial Inc), $AMUN.PA (Amundi SA), $KB (KB Financial Group Inc), $SAN.MC (Banco Santander SA), $BARC.L (Barclays), $LLOY.L (Lloyd’s Banking Group PLC) and the online advertising company $FB (Meta Platforms Inc) were sold.

They were replaced by $SIE.DE (Siemens Aktiengesellschaft), $DTE.DE (Deutsche Telekom AG), $ROG.ZU (Roche Holding Ltd), $ML.PA (Compagnie Generale DES Etablissements Michelin SCA), $BAYN.DE (Bayer AG), $NVS (Novartis ADR) and $MRK (Merck & Co.) .

๐—”๐—ฟ๐˜๐—ถ๐—ฐ๐—น๐—ฒ ๐—ผ๐—ณ ๐˜๐—ต๐—ฒ ๐˜„๐—ฒ๐—ฒ๐—ธ
โ€œPanic Journal Russia / Ukraine Edition Part 2โ€

– This blog post suggests how to prepare mentally for a long Russia-Ukraine conflict.
– Among the suggestions: do not expect a quick recovery, do not not sell, have enough liquidity in the portfolio.
– The post argues that high oil prices will speed up the shift to green energy, so oil stocks ($XOP) may not be a safe investment after all.

Copy Trading does not amount to investment advice. The value of your investments may go up or down. Your capital is at risk.

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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. 51% 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.

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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”ย 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.