EN 
SE 
An escalation in the reported spread of the coronavirus worldwide and its unknown impact resulted in a sharp revaluation of risk premiums and major declines in the world's equity markets. Even gold, traditionally seen as a safe investment, was weaker in February - and the dollar was also slightly weaker against the Swedish krona. For the Global Security Fund, this meant a negative return of 10.7 percent during February, which was in line with other global funds. The market is concerned that the impact of the coronavirus will lead to a significant impact on global growth. However, we can state that virtually all companies have taken a beating in recent weeks, even well-managed companies that are unlikely to be negatively affected by weaker growth in the world.
All holdings except NortonLifeLock, Kongsberg Gruppen and Leidos were down during the month of February. It was an active month for the Norwegian Kongsberg Gruppen, which increased by over 8.7 percent, measured in NOK, during February. On February 4th, the company announced that it had sold the Hydroid Unit to US aircraft carrier manufacturer Huntington Ingalls Industries for $350 million and that the two companies will establish a strategic alliance. On the 12th, the company released its quarterly report which showed record high revenue and order backlog. The company was also able to report that the integration of the Rolls Royce Commercial Marine acquisition is ahead of schedule and the goal of NOK 500 million in realized cost synergies will be achieved already this year – 2 years ahead of schedule. Furthermore, the company is now entering into a cooperation agreement with Zero to increase its sustainability towards renewable and emission-free solutions.
Leidos reported strong revenue growth of 11.6 percent combined with stronger net margins. The company has 2.2x backlog earnings and achieved significant contract gains in recent months. The company is well positioned as it has strong cash flow that will help with future investments required to fulfill new contracts.
Cybersecurity companies underperformed during the month and although Palo Alto Networks reported year-over-year growth of nearly 15 percent, the market was disappointed as it was less than expected and the stock fell 21 percent during the month. Saab released a weak report that missed the market's expectations, and the price retreated by roughly 17 percent during the month. We are convinced that the weak report is temporary and that the company is well on its way to achieving its long-term goals.
Most of the holdings in the GDS fund are companies with safe, government income that benefit from the long-term investment trend in the security industry. The fact that this is drowning in news about the coronavirus and that the price is going backwards is not connected to the companies' future income generation and only means that companies such as Lockheed Martin are now traded at a PE number of around 14 - significantly cheaper than other so-called value companies, which should be considered incredibly cheap.