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Kavaljer
Investmentbolagsfond
August 2025
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A global investment company fund focused on quality, broad diversification and low costs
Kavaljer Investmentbolagsfond is an actively managed equity fund that takes an index-independent approach, investing long-term in Swedish and foreign investment companies and conglomerates, primarily in Sweden and the USA.
Investment companies and conglomerates are entities that invest in other companies while actively supporting their development. These types of companies offer several advantages: active ownership, effective risk diversification, and often attractive dividends. Additionally, investment companies with listed holdings are sometimes traded at a discount.
Through the Investmentbolagsfond, investors have a low-cost opportunity to benefit from the growth of a broad range of high-quality companies, both large and small, operating worldwide. The fund is available on platforms such as Avanza, Nordnet, and SAVR, as well as through banks and institutions trading via MFEX and Allfunds.
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Mixed Stock Market Month – Small Caps Fell While Large Caps Rose
August turned out to be a month of mixed developments, with the Stockholm Stock Exchange (OMXSPI-GI) up 1.0% while the global index (Dow Jones World Index) rose 2.6%. The Small Cap Index (Carnegie Small Cap Return Index Sweden) performed somewhat weaker, just as in July, and ended the month at -1.0%.
During August, global markets were initially driven by gains in large tech companies, particularly those focused on AI. However, during the month a report was released by MIT (Massachusetts Institute of Technology) showing that 95% of corporate AI pilot projects generated no return. This raised the question of whether AI-related stocks are in a bubble, followed by the tech sector losing around USD 1,000 billion in value within just a few days.
Beyond this, we observe that stability in large caps continues to be rewarded, and that the market tends to “forgive” revenue and earnings declines in large companies caused by currency headwinds (likely because these firms are closely monitored by numerous analysts, making the effect “expected”). In contrast, small caps – which do not attract the same analyst coverage – appear to have been punished more severely by the market when showing weakness linked to the same currency headwinds affecting the large caps.
Fund Performance
Kavaljer Investmentbolagsfond had a neutral month, with a performance of +-0.0%. Since the fund’s inception in May 2018, the return amounts to +142%, compared to +91% for the Stockholm Stock Exchange (OMXSPI-GI) and +78% for the global index.
The largest positive contributor among the fund’s holdings during the month was VNV Global with +0.5 percentage points, followed by Berkshire Hathaway, Prosus, and LVMH with +0.3 percentage points each. The largest negative contributors were Microsoft, Fairfax Financial Holding, and MedCap, all with -0.3 percentage points.
Portfolio changes
During the month, we reduced our holdings in Dometic, Xano, and Prosus, while increasing our position in Vitec.
Later in the letter, we share our views on Prosus and Ratos.
The equity allocation was 99%.
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Prosus: Continued Strength
Prosus is a global investment company with a focus on fast-growing internet sectors such as e-commerce, fintech, food delivery, and digital marketplaces. The by far largest asset, however, is its stake in internet conglomerate Tencent, which still represents around 81% of net asset value (NAV). A key part of the Prosus case lies in the large “NAV arbitrage” that exists. The share trades at a significant discount to NAV, and the company’s open-ended share buyback program – financed through sales of Tencent shares – is specifically aimed at gradually reducing this discount.
Profitability in Focus
Prosus continued to deliver on multiple fronts during the summer and reported a strong first quarter in its broken financial year.
Strong Q1 numbers: Adjusted EBITDA rose 54% year-on-year, in line with the upper end of guidance. Revenues increased 15% at the same time. Capital discipline: The company completed asset disposals worth USD 780m over the past four months, strengthening the balance sheet and underscoring its continued focus on disciplined capital allocation. -
Tencent delivers: The largest holding once again impressed, with quarterly results clearly exceeding market expectations. Revenues rose 15%, gross profit 22%, and operating profit 18%. Tencent’s stronger-than-expected growth supports Prosus’s cash flow and continues to fuel buybacks.
As a result, the market has rewarded the stock, which reached all-time-high levels around EUR 54 per share during the summe.
Discount Narrowing – but Still High
In our March monthly letter, we noted that Prosus was trading at a high NAV discount despite extensive buybacks. Since then, the discount has narrowed from around 43% in March to about 32% in August – but remains elevated. As noted, Tencent still represents around 81% of Prosus’s NAV.
Management has been clear that it intends to continue reducing the discount through its open buyback program, financed by further Tencent share sales. This both rewards shareholders and provides room for new strategic initiatives going forward.
Case Remains Intact
We believe Prosus is well positioned to continue narrowing the discount and thereby create significant shareholder value. After the strong share price performance this year, we have chosen to reduce our position somewhat. That said, we continue to view the case as intact: a substantial NAV discount, a strong Tencent anchor, and a management team that has demonstrated a clear commitment to delivering shareholder value.
Prosus represents 5.8% of Kavaljer Investmentbolagsfond.
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Ratos: Sum of the Parts Far Above the Share Price
Ratos delivered a Q2 report in line with our expectations, with comparable revenues up +1% and profitability improving. However, net profit declined in absolute terms – something the market did not appreciate, sending the share down nearly 10% on the day.
The reason for the lower net profit is the restructuring of Plantasjen, through which a number of unprofitable stores were closed. That said, even the unprofitable stores tend to be profitable during Q2 – as well as Q3 – since this is when consumers mainly shop at Plantasjen. This makes the profit drop a completely natural consequence of the closures. For the full year, Ratos expects Plantasjen to deliver an EBITA margin of around 5%. We believe Ratos will wait until the Q3 report before selling or listing Plantasjen, allowing the market to see the solid profitability of the remaining “healthy” part of the business. In our longer review of Ratos in the April monthly letter, we speculated on a valuation of around SEK 1 billion for Plantasjen.
In addition to a potential divestment of Plantasjen, construction company Sentia was listed during Q2, freeing up SEK 1.5 billion for Ratos. After the IPO, Ratos still owns just under 40% of Sentia, which we believe will be sold within a year. Ratos’s remaining holding is valued at SEK 2.65 billion. This should be compared with Ratos’s total market capitalization of around SEK 11.5 billion. With net debt of SEK 4.1 billion, the price for the actual operations (enterprise value) amounts to SEK 15.6 billion.
Another holding we expect to be divested is Aibel – a company within oil services. Ratos owns 64% of NCS Invest, which in turn owns 49% of Aibel. This gives Ratos an effective stake of just over 31% in Aibel. Ratos reports that 49% of Aibel’s EBITA 2024 equaled SEK 434m, which implies Ratos’s share at SEK 278m. Assuming this is listed at 7x EBITA, the value for Ratos’s stake amounts to nearly SEK 2 billion. Aibel also had a net cash position of NOK 1.9 billion at year-end 2024, adding nearly SEK 0.6 billion for Ratos. In total, we estimate a value of about SEK 2.5 billion for Ratos’s share of Aibel.
If we strip out the values of Plantasjen, Sentia, and Aibel, the remaining enterprise value is SEK 9.5 billion. Should these divestments materialize, Ratos would then consist primarily of Presis Infra (infrastructure services), Knightec (engineering consultancy), and HL Display (retail communication and merchandising solutions). Together, these three companies generated around SEK 1 billion in EBITA during 2024. In addition, several smaller holdings contributed just under SEK 0.5 billion in EBITA in 2024.
For SEK 1.5 billion in annual EBITA (with strong cash generation), investors today pay SEK 9.5 billion – equating to 6.3x EBITA. In our view, this valuation is far too low, and we believe the share still has significant upside.
Ratos represents 4.7% of Kavaljer Investmentbolagsfond
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Positive and Negative Contributors, Top 5 |
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Fund Facts
Fund Type: SICAV (UCITS)
Name: LMM - Kavaljer Investmentbolagsfond
Custodian: CACEIS Investor Services Bank S.A.
Auditor: PricewaterhouseCoopers Société cooperative
Management fee: 1.0% / year
Minimum Investment, SEK: 100
Subscripiton/Redemption: Daily
ISIN: LU2895054406
Risk level: 4 av 7
Category: Equities, Global & Sweden
AUM: SEK 898 millions
Morningstar Rating: ⭐️⭐️⭐️
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“You cannot predict, but you can prepare.”
Howard Marks
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Nacka Strand, September 3, 2025
Peter Lindvall, Håkan Telander & Jesper von Koch |
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