Elegant way to protect Scandi portfolio against downturn

Friday was bloody. The markets are quite high and becomming fragile. I wrote here about many long ideas, that I played. I have been torturing myself how to hedge against violent downturn. I am looking at short ideas, that are short based on its fundamentals – that will go down it good or bad markets. Any suggestions appreciated.

So far, I like the most Sparebank idea – short Avanza. The idea behind the idea is simple – people in lockdown had a lot of free time. Many started to gamble at the stock maret. Many used Avanza trading platform. As a result Avanza commissions trippled. Avanza made most money on fx comissions as gamblers were buying US stocks.

As Scandinavia has reopened, people went to work and have much less time. Avanza trading revenues should decrease significantly Sparebank believes. That is not priced in. It is their top short idea for this month published last week.

Two days ago in their daily report the wrote:

(-) AVANZA: We inlcuded AZA among our Monthly funding candidates for June as we consider both earnings estimates and fwd P/E to be too optimistic. Earlier this week we got an interesting US datapoint as JP Morgan guided Q2 trading revenues down 38% from same period last year. Previously, Citigroup guided on a 30% drop in their Q2 numbers. The reduced trading revenues are obviously from highly elevated levels, but we believe that this trend will continue and put pressure on AZA’s shareprice.

I am short Avanza and I increased short yesterday.

I am still bullish on some stocks. My favourites are Biovica and Quantafuel. See previous posts for reasoning. I believe that both have doubling potential on the major catalyst in the next two months. The same as XBrane did, about which I wrote here many times before.

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