Investing in undervalued securities worldwide

Weekly Update 20 March 2023

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2023 has been a tough year for Value stocks. The Value stock index ($VTV) is down 5% for the year to date, while the Growth stock index ($VUG) is up 11%. This is a complete reversal of 2022, when Growth stocks lost 33%, Value stocks only 2%.

Our strategy, which focuses on Value stocks, has returned +7.6% for the year to date. It has thus has easily beaten the Value stock index, but has lost to the Growth stock index. This is an OK performance in the circumstances.

The poor performance of Value stocks in 2023 is due to a worsening economic outlook. Value stock indices are overweight banks and oil companies, which tend to do badly in recessions.

The last two week’s events in the banking industry have thus had a very different impact on Value and Growth indices. Value stocks are down 5% this month, while Growth stocks are up 2%.

The one time that you do not want to hold Value stocks, despite their attractive valuations, is when a recession starts. Today may potentially be one such time. So, to protect the portfolio, we sold most of our banks and oil positions a week ago.

The portfolio is now positioned in defensive Value stocks from the Healthcare, Telecom and Utilities sectors. Last week we also added a position in two Gold companies. Gold typically does well if interest rates and the US dollar go down, and so it is a hedge against the combination of economic weakness and high inflation.

We expect to stay defensive for the next few months until the economic situation stabilises. This is a temporary measure – usually our strategy invests in riskier securities. It may be that if recession fears intensify, a “last great entry point into inflation, value, small cap trades” (in the words of Michael Hartnett, a market strategist at the Bank of America) will materialise, providing investors with a chance to earn attractive and possibly very substantial returns from the economic recovery later this year.

2023 performance YTD
@triangulacapital +7.6%
$SWDA.L +2.4%

Portfolio changes
Positions were opened in gold miners Barrick Gold and Newmont Mining Corp and the utility Enel.

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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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.