Kavaljer

Investmentbolagsfond

September 2025

A global investment company fund with a focus on quality, diversification and low fees

Kavaljer Investmentbolagsfond is an actively managed, benchmark-independent equity fund that invests long term in 25–45 investment companies, conglomerates and serial acquirers. The fund has a global mandate, providing broad exposure across sectors and geographies at a low cost.

Investment companies are firms that invest in other businesses, both listed and unlisted. Conglomerates are groups that typically own 100% of unlisted subsidiaries across different industries. Serial acquirers are companies that continuously acquire smaller businesses at a high pace.

What these three categories have in common is that they provide solid diversification and active management at low cost. In addition, they are often characterized by experienced and long-term owners, a proven ability to allocate capital, and access to unlisted quality companies. Investment companies can also trade at a discount to net asset value (NAV), which provides additional return potential. Serial acquirers, on the other hand, rely on a proven business model that has historically generated strong and predictable cash flows, while conglomerates offer stability in turbulent times through their diversified operations.

The fund is available through platforms such as Avanza, Nordnet and Savr, as well as through banks and institutions connected to MFEX and Allfunds.

Another Mixed Month for Equities – Weak Small Caps, Strong Global Tech

September was yet another mixed month for equities. The Stockholm Stock Exchange (OMXSPI-GI) gained 0.5%, while the global index (Dow Jones Global Index) rose a solid 3.2%. Small caps (Carnegie Small Cap Return Index Sweden) once again lagged behind, finishing the month down –2.0%.

As earlier this year, global indices were driven by strong gains in large tech companies, in particular those focused on AI. The so-called MAG7 companies rose by an average of +8% in September alone.

We have now seen an extended period where global tech giants have pushed global indices to new highs time and time again, while Swedish and Nordic small caps have struggled. In times like these it is easy to feel FOMO (fear of missing out) and give up on small caps “since the stocks keep underperforming anyway,” instead moving capital into global funds or US tech funds boosted by the strength of the MAG7.

We believe Howard Marks captures our stance well:

"Resisting – and thereby succeeding as a contrarian – is not easy. Many factors make it difficult, such as our natural tendency toward herd behavior and the pain of going against the grain, since momentum inevitably makes pro-cyclical actions appear correct for a while. Given the uncertainty of the future, and the difficulty of being certain that your position is right – especially when the market moves against you – it is a challenge to be a lone contrarian."

Multiple studies show that small caps outperform large caps over time. We also maintain strong conviction in our ability to select the best small-cap companies when valuations are attractive – something reflected in our long-term performance. We therefore remain committed to our strategy and confident in strong returns ahead.

Fund perfomance and attribution

Kavaljer Investmentbolagsfond gained +0.4% in September. Since inception (May 2018), the fund is up +143%, compared with +92% for the Stockholm Stock Exchange (OMXSPI-GI) and +83% for the global index.

The strongest positive contributors during the month were Prosus (+0.8 pp), VNV Global (+0.5 pp), and Ratos (+0.3 pp). The largest negative contributors were Linc (–0.3 pp), MedCap (–0.3 pp), and Vitec (–0.2 pp).

Portfolio changes

During the month we reduced positions in Xano, VNV Global and MedCap, while increasing our holdings in Vitec, Ratos and Linc.

Later in this letter we provide deeper dives into Vitec, Byggmästaren AJ Ahlström, VNV Global and Sdiptech. Below is a brief summary of these updates:

Vitec: The share is down around –38% YTD, pressured by a weak Q2 and high short interest. The biggest hit came from Enova, where stable weather meant lower revenues versus last year’s exceptional quarter. Excluding Enova, the core business continues to grow. The acquisition of Olyslager strengthens profitability and AI development supports the business model. With a solid balance sheet and expected higher M&A activity, we see strong growth potential and have therefore increased our position.

Byggmästaren AJ Ahlström: The company proposes an extraordinary dividend of SEK 32 per share, equivalent to roughly 12% of market cap, highlighting the value unlocked from the Safe Life divestment. It also has a SEK 50m buyback mandate, where we believe the dividend may trigger increased activity and facilitate future repurchases. With around SEK 500m available for new investments, we see good opportunities for continued value creation.

VNV Global: The company has divested taxi platform Gett and fashion resale platform Tise, the latter at a price well above book value. These transactions strengthen the cash position to around USD 100m and enable repayment of half of the outstanding bond in October. VNV has also announced a share buyback program, which we view as value-accretive given the large discount to NAV.

Sdiptech: The share has been pressured by high leverage and operational weakness, but we see several positives. The new management team is pursuing a more disciplined acquisition strategy, while divestments of older, low-margin legacy assets are streamlining the portfolio. A refinancing in 2026 is expected to lower financing costs, and with easier comps and a stronger economy we believe 2026 could mark a turning point.

Equity exposure was 99%.

New Feature! Discount/Premium in Our Investment Companies

We are introducing a new section in the monthly letter where we will regularly report on discounts and premiums in our investment companies. The discount to net asset value (NAV) is a central factor when analyzing investment companies, as it shows how much you pay for one krona of underlying assets. Put simply: an investment at a 50% discount means buying assets worth 100 kronor for only 50 kronor, which creates a built-in margin of safety and potential for value creation as the discount narrows through dividends, buybacks, or revaluations.

The Fund’s Serial Acquirers

In addition to investment companies and conglomerates, we also invest in serial acquirers. We like this category because they combine diversification with long-term value creation. They are skilled capital allocators that, through recurring acquisitions, create both organic and acquisition-driven growth – often delivering returns that have outperformed the broader market over time.

Comments

We have chosen to invest in serial acquirers such as Sdiptech, Green Landscaping Group, Beijer Alma, Idun Industrier, Vitec and Medcap – companies that currently trade at lower multiples than the more established players Lifco, Lagercrantz, Momentum Group and Addnode. Our conviction is that these holdings have strong long-term prospects and attractive fundamentals, even if some of them have gone through challenging periods recently.

Why lower valuations?

The valuation differences largely stem from the fact that these companies are smaller, have shorter operating histories, or are facing temporary challenges. For example, Sdiptech is now divesting older, low-margin acquisitions in order to focus on its core operations. Green Landscaping Group has been impacted by unusually mild winters but is becoming less weather-dependent over time thanks to greater geographical diversification.

In short, we view today’s lower valuations as an opportunity to invest in quality before the market fully recognizes the potential. Looking ahead, our ambition is to continue increasing our exposure to serial acquirers.

In-Depth Reflections on Our Holdings

Vitec: Short-term turbulence but a strong core

When we wrote about Vitec in July, we noted that much of the then-weak report could be explained by a temporarily over-profitable period in the business unit Enova. Since then, however, the share has continued to come under pressure and is currently down around –38% for the year – a turbulent development to say the least. The sharp decline reflects a combination of factors: a weaker Q2 report, softer organic growth, high short interest, and a generally weak market sentiment.

A brief note on Enova’s business model

Enova helps its customers participate in the Dutch balancing market, where grid operators purchase balancing services as a kind of “insurance” to keep the grid stable.

If too much or too little electricity enters the grid, it can cause frequency fluctuations and, in the worst case, blackouts. Revenues are largely driven by the degree of weather volatility – large swings require more balancing, which in turn generates higher revenues for Vitec.

During the exceptionally strong Q2 2024, weather conditions were unstable, which resulted in high volumes and prices. This year, by contrast, stable weather and increased competition led to both lower volumes and prices, with SEK 80 million lower transaction-based revenues and SEK 30 million lower gross profit compared to the previous year.

Core business is stable

Excluding Enova’s extraordinarily strong Q2 2024, Vitec’s other 45 business units show continued growth in cash-generating operating profit (Cash EBIT).

Cash EBIT (comparable to EBITDA – CAPEX) is an internal KPI that measures operating profit adjusted for capitalized development costs and amortizations related to product development – in other words, a figure closer to actual cash flow. The core business therefore appears to remain stable.

Our perspective on the short positions in Vitec

The market has amplified the decline through rising short interest, which has put further pressure on the share. At present, Vitec is the 9th most shorted company on the Stockholm Stock Exchange, with around 7% of shares sold short. Our view is that the shorting appears to be of a quantitative nature – driven by systematic models reacting to momentum and technical signals – rather than fundamentally based. This also means the pressure could ease quickly once sentiment shifts.

Comparison with Constellation Software

Constellation Software, a Canadian software acquisition group, is the most relevant peer for Vitec. Constellation follows the same decentralized model of acquiring vertical market software companies (software aimed at narrow niches).

Vitec has in recent years shown higher organic growth than Constellation Software, particularly in 2022 and 2024. Within vertical software, organic growth is a key quality indicator as it signals that customers are expanding with the products and that the software creates lasting value. Constellation’s lower growth is partly explained by its larger size and more acquisition-driven model. Despite Vitec’s strong fundamentals, however, the share has performed significantly weaker than its Canadian peer over the past three years.

Interesting Acquisition of Olyslager

We view Vitec’s acquisition of Olyslager in November 2024 positively. Olyslager is a global leader in IT solutions for the lubricants industry, delivering software and data to manufacturers, distributors, and workshops. The acquisition brings several attractive characteristics:

• Revenues of just over SEK 140 million, with 99% recurring revenue and around 5% annual growth

• EBITDA margins of 40–50%, higher than Vitec’s group average

• Adds around 5–6% to Vitec’s EBITDA

The Impact of AI on Vertical Software

On October 1, Constellation Software held its latest status update, where the impact of AI on vertical software was discussed in detail. Key insights included:

• AI is seen as an opportunity to develop products faster and deliver more value to customers

  
  

• Constellation positions itself as a “fast follower” – quick to respond to competitors’ moves but waiting for proven effects

  
  

• No signs so far of increased competition from AI-driven newcomers

  
  

• Smaller, focused business units are advantageous as they allow for closer customer relationships and AI solutions tailored to specific needs

In our view, this strengthens the business model on which both Vitec and Constellation are built. Vitec already has several concrete AI applications in use. In real estate brokerage, agents in Sweden and Norway use AI to generate descriptions of properties and neighborhoods, which significantly simplifies their work. Even more advanced are Vitec’s energy forecasting models, where AI has been trained on around 20 different forecasting models to select the best outcome based on weather and market conditions.

Outlook

Looking ahead, we believe Vitec has strong potential to continue growing at a high rate without jeopardizing its balance sheet (currently 1.5x Net debt/EBITDA). In a realistic scenario, the company should be able to grow sales by around 15% per year, driven by roughly 5% organic growth and about 10% from acquisitions. We see this as fully achievable given the company’s history, although we note that acquisition activity so far in 2025 has been low, with only one deal completed. Management, however, expects M&A activity to pick up during the autumn and winter.

In summary, we reiterate our view from July: the market has priced in far too much negativity. Against this backdrop, we have chosen to further increase our holding in Vitec during the month.

Vitec accounts for 2.3% of Kavaljer Investmentbolagsfond.

Byggmästaren – Value-Creating Path Forward

In June, we wrote about the much-anticipated partial divestment of Safe Life, which confirmed the valuation of the holding and freed up significant liquidity. Byggmästaren is now following up by proposing an extraordinary dividend of SEK 32 per share, equivalent to roughly 12% of the market capitalization. We view this as a very positive initiative, as it concretely highlights part of the value that has been built up in the portfolio.

The company also has a SEK 50 million share buyback mandate, but so far has had difficulty executing buybacks to any larger extent – which we interpret as a sign that the share is attractively valued and that few shareholders have been willing to sell. In our view, the extraordinary dividend could trigger increased trading activity in the share, which in turn may make it easier for the company to utilize its buyback mandate going forward.

In addition, a 4:1 share split has been proposed, which is expected to improve liquidity in the B-share and increase investor interest.

After the dividend, and including existing credit facilities, Byggmästaren will still have around SEK 500 million available for new investments, in line with its strategy of investing in companies with strong management teams, scalable business models, and sustainable growth.

We believe that the combination of an extraordinary dividend, share split, continued buyback capacity, and strong investment resources should enhance the attractiveness of the share going forward, while also providing the market with further evidence of the company’s long-term value creation.

Byggmästaren accounts for 3.4% of Kavaljer Investmentbolagsfond.

VNV Global – Divestments Confirm Portfolio Values

During the autumn, VNV Global has realized two important holdings. The largest contribution came from the taxi service Gett, which was divested for approximately USD 89 million. Although the price ended up marginally below the most recent booked valuation, the transaction provided a significant liquidity boost. In addition, the company sold its holding in Tise, the Norwegian second-hand fashion platform, to eBay. This sale took place at a price clearly above the booked value (USD 11 million compared to USD 6.8 million).

With these transactions, VNV strengthens its financial position. The cash balance is now estimated at around USD 100 million, which enables the company to halve its outstanding bond already at the beginning of October. A further USD 10 million is also expected from the Tise sale.

In addition, VNV has announced a share buyback program, which we view as value-accretive given the large discount to NAV (44%). Overall, we believe these recent measures strengthen the balance sheet and increase confidence in VNV’s long-term strategy.

VNV Global accounts for 3.7% of Kavaljer Investmentbolagsfond.

Sdiptech – Towards a Brighter Horizon

In March, we introduced Sdiptech as a new holding in the portfolio. At that time, we highlighted the company’s strengths: a decentralized model, a clear niche within critical infrastructure, and an attractive valuation compared to other serial acquirers. Since then, however, the share has continued to perform weakly, weighed down by market concerns over leverage, operational weakness, and a difficult communication history.

It is true that the company carried with it a heavy balance sheet from the aggressive acquisition years of 2020–2021, which today leaves it with relatively expensive debt. That said, we appreciate the company’s more disciplined acquisition strategy in recent times. Multiples for new acquisitions have come down, without any compromise on the quality of assets. At the same time, a refinancing of the bond expected in autumn 2026 should contribute to both lower financing costs and stronger cash flows going forward.

Another positive aspect is that the divestments now under discussion mainly concern older, so-called legacy assets – businesses that the company would no longer choose to acquire today, as they generally have too low profitability. In this way, the portfolio is being gradually streamlined, and capital can be freed up for more attractive investments ahead.

In the short term, challenges remain and the market continues to be cautious. But looking forward, the outlook appears brighter. With a normalized economic environment, easier comparison figures, and possible divestments, 2026 could become a turning point. If the company succeeds in addressing its operational weaknesses, we believe there is significant potential for a swift revaluation from here.

Sdiptech accounts for 1.2% of Kavaljer Investmentbolagsfond.

Kavaljer Investmentbolagsfond vs Benchmark indeces

Top and Bottom Contributors of the month

Geographical distribution, %

Service Providers and Terms

Name: LMM – Kavaljer Investmentbolagsfond

Depositary: CACEIS Investor Services Bank S.A.

Auditor: PricewaterhouseCoopers Société coopérative

Management Fee: 0.3% per year

Minimum Investment: SEK 100

Subscription/Redemption: Daily

ISIN: LU1777968246

Risk Level: 4 of 7

Category: Equity Fund Global & Sweden

AUM: SEK 893 million
Morningstar Rating  ⭐️⭐️⭐️

"Being a contrarian is hard — herd behavior and short-term pain make it tough, especially when prices move against you. But that’s exactly why it pays off."

Howard Marks

Nacka Strand 3 oktober 2025
Peter Lindvall, Håkan Telander, Jesper von Koch, Jakob Wahlberg

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