Norway’s wealth fund aims to root out ‘rotten apple’ stocks

NORWAY’S US$1.4 trillion sovereign wealth fund, one of the world’s largest investors, plans to put more effort into identifying and divesting from unsound companies after recent turmoil in global banking and other industries.

“We think it’s becoming more and more important to put resources into finding what I call the rotten apples,” the fund’s CEO, Nicolai Tangen, told a parliamentary hearing in Oslo on Tuesday (Apr 18).

“These are companies whose state of health is perhaps not quite what it might appear.”

The fund, run by Norway’s central bank, said it lost “a considerable sum” on the collapse of Silicon Valley Bank, one of more than 9,200 companies it owned shares in at the start of the year. The fund also held a stake in Credit Suisse, which had to be rescued by larger rival UBS.

The Norwegian fund’s stake in SVB Financial Group, owner of Silicon Valley Bank, stood at 1.01 per cent at the start of 2023, valuing it at US$138 million, while its 1.49 per cent holding in Credit Suisse Group was worth US$177.7 million.

By identifying problematic investments early, the fund can save money, Tangen told parliament’s finance committee.

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“We’ll never be able to spot all of the rotten apples, but we can try to find as many as we can,” Tangen said.

As an example, he said the fund had sold most of its shares in India’s Adani Group before a report in January by Hindenburg Research led to a meltdown in the conglomerate’s shares. Shares in Adani Enterprises have lost 51 per cent of their value so far this year. REUTERS