Investing in undervalued securities worldwide

Weekly Update 4 April 2022

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Q1 2022 was the worst quarter for stocks in two years. The MSCI World index ($SWDA.L) lost 5% due to the war in Ukraine and worries about the consequences of tighter monetary policy by the Federal Reserve.

Our strategy outperformed the index by more than 7 percentage points. The strategy also slightly beat the Value stock index $VTV .

The strategy is staying invested in stocks because although the yield curve briefly inverted last week, sending an early recession warning signal, stocks have gained 8% in the 12 months after inversion, on average.

“The current spreads indicate that the probability of a recession is still below 50%,” notes Philip Marey of Rabobank.

However, we are not rushing into the riskiest areas of the market and maintain a balanced exposure across sectors.

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@triangulacapital +2.6%
$SWDA.L -5.0%

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$ROG.ZU (Roche Holding Ltd) and $AZN.L (AstraZeneca) were replaced by $VIE.PA (Veolia Environnement S.A.) and $BDEV.L (Barratt Developments), slightly increasing the risk level of the portfolio.

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“State of Play”

– KKR forecasts $SPX500 will end the year at 4750, and will further increase to 4840 in 2023.
– They note that the best-performing market segments during the stagflationary 1970s were Value stocks ($VTV), Small Caps ($VB), REITs ($REET), and Commodities ($DJP).

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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. 74% 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” 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.

Higher Risks for Higher Returns

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

The strategy invests in countries 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.

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.