Sofina: ‘We use AI to detect attractive companies’

With digital tools, Sofina can search for interesting investment opportunities more efficiently, CEO Harold Boël said on Wednesday during the general meeting.

Sofina

, the holding company of the Boël family, has had a transition year, according to the CEO. ‘After the strong correction in 2022, which was mainly due to the rise in interest rates, 2023 was the year of stabilization.’ Boël addressed the hundred or so shareholders present via a video connection, because he recently tested positive for Covid.

The intrinsic or net asset value of the share fell by 5 euros to 274 euros in 2023, but rose again to 278 euros in the first quarter, according to Boël. ‘Our portfolio is in good health. We focus on the long-term net asset value.’ The intrinsic value has increased by an average of 9.9 percent per year over the past ten years.

Boël noted that the global stock index MSCI is the reference for Sofina, not the American technology stock exchange Nasdaq. ‘A large part of our portfolio consists of investments that are not technology or listed on Nasdaq.’

A shareholder said that Sofina pays out too little dividend. ‘The net dividend of 2.35 euros per share yields a net dividend yield of barely 1 percent at the current share price. That’s very poor.’ Boël replied that Sofina tries to increase the dividend every year and that predictability is more important than other considerations.’ This year the dividend has been increased by almost 4 percent.

“Do you use artificial intelligence (AI) to select companies?” asked another shareholder. “We use software to screen the internet,” Boël said. ‘We use digital tools, such as AI, to select companies to talk to. This results in a major improvement in productivity. I remain modest, but I think we are a leader.’

As expected, there was also a question about ByteDance, the parent company of the video app TikTok and Sofina’s second most important participation. In the United States, some are calling for a ban on TikTok. Boël said the investment in ByteDance dates back to 2016, when TikTok did not yet exist. ‘ByteDance achieves three quarters of its turnover in China. TikTok’s contribution is much smaller and its valuation is relatively solid. The investment in ByteDance remains one of our most successful.”

To limit the impact of geopolitical risks, Sofina focuses its investments in China and India on companies that are active in the local market. According to Boël, this offers the best protection against protectionism.

At the start of the meeting, Chairman Dominique Lancksweert briefly referred to the former star participation Byju’s, an Indian self-study app. “When we face difficulties, like Byju’s, we are a committed investor.” Byju’s is in bad shape and the weight of that investment in the portfolio is now ‘intangible’ (insignificant).

From now on, the variable remuneration of the management will not only depend on the ‘relative performance’ of the share (Sofina compared to the MSCI). The ‘absolute performance’ (increase or decrease in the price) and ESG criteria (sustainability) will also play a role.

At the end of the meeting, the mandates of directors Nicolas Boël, Laura Cioli, Laurent de Meeûs d’Argenteuil, Charlotte Strömberg and Gwill York were renewed.