Exelity månadsrapport – oktober 2023

Exelity Monthly Report – October 2023

Exelity continues to validate its unique strategy, where the net return for the fund during October amounted to -0.5 %, which can be compared with -3.7 % for the Stockholm Stock Exchange's broad index OMXSPI and -10 % for First North All Share, but as usual we remind you that there is no relevant benchmark that matches Exelity's unique profile. Our goal is instead to deliver at least 10 % net return per year, where the fund is up 10 % this year when we close the month of October (OXSPI -3.8 %, First North All Share -18.7 %). Our upcoming loan income for the next twelve months corresponds to approx. 5 % of the fund's current asset mass (NAV), which forms a good basis for future stable returns. We continue to parry the stock market decline well, where the fund's liquid position at the end of October amounted to 14 % of NAV. The fund's strong liquid position is deemed to create good conditions to benefit from the recent stock market fall, where we are expected to allocate the fund's liquid assets in the near term. It is often said that volatility kills returns because large percentage declines quickly destroy the interest-on-interest effect. The fund's net return of +10 % through October this year is a result of the stability and low volatility of our strategy. During the year, we have delivered eight profitable months and thus deliver a continued stable excess return against all indices. Developments in October were again driven entirely by transactions. Guarantees returned +0.8 %. Interest generated +0.8 %, excluding our origination fees which usually amount to at least 5 % and are settled immediately, but accrued until the maturity date of the loans, thus providing additional income in the coming months.

Our loan stock at the end of October amounts to 42 % of NAV, and is expected to rise to 50% during the end of the year given our continued strong loan pipeline. Given our loan limit of max 50% of NAV against loans, the loan portfolio will not rise thereafter. Conversion clauses in the loan agreements mean that we can quickly correct the exposure if necessary. In summary, our loan portfolio is robust with strong development and good news in most of the holdings, which facilitates recapitalization and repayment. During October, we signed a new guarantee, where the guarantee portfolio now corresponds to 22% of NAV. Members of the public may be wondering how this guarantee exposure goes together with a record loan portfolio and the risk of having to subscribe for shares in the issues. We therefore want to underline that the fund's liquidity situation is still excellent because the majority of the listed portfolio consists of smaller positions in liquid companies.

The listed holdings burdened the development by -0.4 %. The decline is broad among the portfolio company, which can primarily be explained by the weak stock market performance. The fund's largest holding, Smart Eye, lost 8%, but negatively affected the fund's NAV by only 0.6%. The fund's best holding was mySafety (formerly Empir) stage 10 %. We are now entering November, a month where most of our portfolio holdings report. The lion's share of Exelity's return this year has come from loans and guarantees, while the result in the listed portfolio has been meager.

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