September 25th, 2023 | 08:10 CEST
Shell, Hard Value Fund, Rheinmetall - All for performance!
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"[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
Hard Value Fund - Value-oriented investing in Focus
One speaks of an ESG investment when environmental, social and ethical aspects are explicitly included in traditional financial analysis. For many private and institutional investors, ESG standards and sustainable investment play an increasingly important role. Companies from sectors such as tobacco, cannabis, defense, nuclear and fossil energy or mining are thus a taboo subject for investment. The Hard Value Fund (ISIN: DE000A3D1ZP), launched at the beginning of the current fiscal year, takes a different approach.
The focus is on financial sustainability, i.e. asset accumulation and asset optimization. Thus, the fund management of "van Grunsteyn", a brand of Walter Ludwig GmbH Wertpapierhandelsbank from Frankfurt, invests value-free to achieve continuously good returns and to preserve the wealth substance of the investors. When making investment decisions, emphasis is placed on value, dividend history, healthy cash flow, and future prospects of the companies. Thus, both ESG-compliant and non-compliant companies have a chance to be included in the Hard Value Fund portfolio.
The current heavyweight in the sector allocation of the fund, which has been in the green zone since the beginning of the year at 5.5%, is nuclear energy, which is viewed critically, especially in Germany, as well as fossil energy companies with a share of around 22%. The aerospace & defense sector, which is booming due to the rearmament of countries, follows at just under 20%. The mining, tobacco, including cannabis, and gold sectors fluctuate around the 10% threshold.
The largest positions of the global equity fund are Rolls-Royce with around 5%, just ahead of the defense company Hensoldt, Marathon Petroleum, Munich Re and Rio Tinto. Companies from the US and Germany are represented with a share of around 22%, followed by Great Britain (18%), Japan (10%) and Canada with just under 8%.
The fund is suitable for investors who are profit-oriented and attach importance to an unconstrained portfolio, but do not have the time and possibilities themselves to implement their investment strategies independently on the market. The Hard Value Fund offers a listed alternative.
Rheinmetall AG - Analysts remain positive
The share price performance of the integrated technology group since the start of the Ukraine conflict is simply impressive. The Rheinmetall share price has risen by more than 200% to a current level of EUR 257.60. The all-time high of EUR 276.70 is still within striking distance, and all that is needed is to break above the short-term downtrend established since April 2023 at EUR 269.20**. On the other hand, there is a risk that the share price will fall below the current support level of EUR 241.90.
Various analyst firms have been increasingly optimistic about the defense group in recent days. The US investment bank Goldman Sachs has left its rating for Rheinmetall at "Buy" with a price target of EUR 319 following the appearance of Group CEO Armin Papperger at an in-house conference. Accordingly, the Düsseldorf-based company should also benefit from the increased German defense budget. In addition, the outlook for the rest of the year is positive. On a medium-term basis, there is margin potential for the Group in the mid-teens.
Hamburg-based Berenberg private bank also invited the Rheinmetall CEO to its corporate conference. Following the conference, the price target of EUR 300 and the "Buy" rating were reiterated. Papperger expressed confidence in the medium-term opportunities for the automotive supplier and defense group, with Hungary likely to become a key growth driver in the military sector in the coming years.
Shell - And nobody cares
Last week, investors took note of the lawsuit and its possible impact on the share price, but it did not detract from the stock's performance. With a price of USD 64.52, Shell's stock reached a new all-time high, with gains of approximately 20% since the beginning of the year, driven by the continued rise in oil prices. Since the Corona lows, the share price has seen an impressive gain of 250%.
In the recent past, the state of California sued leading oil companies for misleading people about the dangers of their products. The suit, filed in San Francisco, alleges that the companies knew for decades about the potentially "catastrophic consequences" of fossil fuels. Other US states have filed similar lawsuits, but California's case is particularly sensitive because the state is a major oil producer, and prosecutors have had success in the past, according to The New York Times.
The American Petroleum Institute considers the lawsuit a targeted attack on the sector. California is demanding that oil companies pay for the costs and penalties incurred. Governor Newsom of California accuses the oil industry of spreading falsehoods for more than 50 years. Richard Wiles of the "Center for Climate Integrity" considers the case the "most significant climate lawsuit" against the oil industry in the United States.
Investing with a pure focus on ESG-compliant investing carries significant return risk for investors. Here, the Hard Value Fund focuses on financial sustainability. The oil company Shell was quoted at its highest level ever, and Rheinmetall is within striking distance of its highs.
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