Ex-Hedge Fund Manager Generates 51% Return in Skiers’ ParadiseBy
The region of Trondelag is the cradle of Norway’s Winter Olympic dominance, with 14 gold medals over the past two events alone.
Now, Jomar Kilnes, a former hedge fund manager who has come home after more than a decade in the Bahamas and the U.S., is showing that delivering outsized investment returns is the area’s real forte. His Forte Tronder fund, which mainly invests in companies with local links or production, returned 51 percent in 2016, making it the top performer of all Norwegian funds.
“We saw uncorrelated businesses of oil, fish farming, local banks and technology that we could build a high quality portfolio with,” Kilnes, a portfolio manager at Trondheim-based Forte Fondsforvaltning AS, said in a telephone interview on Tuesday.
While champion skiers such as Petter Northug and Marit Bjorgen are both from the mid-Norway region, its real assets lie underwater -- both in the form of fish and oil.
Kilnes has about one-third of the 445 million-krone ($52 million) fund in fish farmers, and 20 percent each in the oil sector and banks. He’s betting that more gains in salmon prices in 2017 will continue to deliver solid returns.
“It will be a good year for fish farmers, but not as good as last year,” he said. “It’s a mega-trend with rising demand and unfortunately not any new supply. There will be high prices for a long time.”
Marine Harvest, controlled by billionaire John Fredriksen, rose 30 percent last year amid record salmon prices. It’s down 1.5 percent for this year.
The fund was one of the top ranked Nordic equity funds in 2016, beaten only by a handful of funds investing in Russia, according to Morningstar Inc.
Kilnes, 60, moved back to his hometown in 2010. Before that, he worked as a manager for hedge fund Green Cay Asset Management and learned about value investing from Sir John Templeton. Forte Tronder is value based and has a 2-3 year horizon on its investments, according to Kilnes.
The fund’s biggest holding is oil producer Aker BP ASA, which has soared more than 250 percent after hitting a low in January. Aker BP is the result of a $1.3 billion merger between BP Plc’s Norwegian unit and a company controlled by billionaire Kjell Inge Roekke. It holds a significant stake in the Johan Sverdrup oil discovery, one of Norway’s biggest finds.
“We bought as much as we could,” Kilnes said. “We believed the oil price would come back and there are big future values in the company through Sverdrup.”
Kilnes also sees signs that the worst might be over for the oil service sector. The fund’s latest bet is Kvaerner ASA, which it bought in December.
“We try to buy companies that do modernization, maintenance and upgrades of existing fields,” he said. “We think the oil companies will start to invest there first.”
When it started, Forte’s biggest investors were from Oslo. Locals have been a bit “slow” to catch on to the returns hiding in their midst, according to Kilnes.
Tell that to Northug the next time he wins a ski race with his patented sprint finish.