Alexander Farnsworth/iStock Editorial via Getty Images Dear readers/followers, Swedbank ( OTCPK:SWDBY ) has been a very profitable investment for me as of late. Since I wrote my last article on the company back in November of last year, close to the time when the bank "troughed", the company has seen a significant market-beating rate of return. You can see this here, and you can find my last article on the bank here.
Seeking Alpha Swedbank RoR (Seeking Alpha Swedbank RoR) My thesis at the time was based on a very solid sort of outperformance due to both a low valuation and a very attractive upcoming yield, derived from interest rate tailwinds. This has materialized - and not just for Swedbank. I also updated my thesis for other Scandinavian banks, such as Handelsbanken ( OTCPK:SVNLF ) and Nordea (NRBAY).
Swedbank has never been, for the past few years, in as good a position fundamentally as these two, but still represents an attractive opportunity for the medium term. That is why I own stakes in all three banks at this time. I have clear targets for selling these stakes, which is why I use covered calls for the very long term (1-2 years) to enhance the yield further by 2-3% and potentially sell my stakes.
My current strike prices for my Swedbank calls are above 240 SEK/share for the native, and I bought shares below 175 SEK/share. Buying Swedish banks in this fashion is a very effective way of making a very solid yield and a good upside. Let's look at the upside and results a.
