|
Kavaljer
Investmentbolagsfond
October 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.
|
|
|
|
|
Stock market rebound for high-quality small-cap companies
October was a consistently strong month for the stock market, with the Stockholm Stock Exchange (OMXSPI-GI) rising by 4.1% and the global index (Dow Jones Global Index) increasing by 2.0%. After a period of weakness for the small-cap index (Carnegie Small Cap Return Index Sweden), we also saw a strong recovery here, with a gain of +4.1% for the month.
In particular, we’ve seen that small-cap companies with strong financial track records, but weaker short-term performance, have received significant vindication. Following many seemingly “decent” reports from these firms, their shares have often risen by 10–20% on the reporting day — a clear sign that the fear surrounding small-cap stocks has been excessive.
In preparation for this monthly letter, which was written before the wave of reports with the above-mentioned results unfolded, we wrote the following passage:
Thoughtful lessons or foolish hindsight?
In the stock market, one is constantly learning, but the difference between genuine lessons and mere hindsight is crucial. Right now, we see a divided market: companies delivering strong results here and now are being priced as if the future holds nothing but sunshine, while quality companies experiencing temporary setbacks are being treated harshly and punished severely.
It’s easy to be wise in hindsight and conclude that one should always pay up for the highest quality — “buy cheap, cry every time; buy quality, cry only once.” However, our experience shows that there is often greater value in identifying companies with strong track records and proven quality that are currently out of favor with the market due to temporary challenges.
Small-cap companies are particularly affected: a few weak reports or uncertain outlooks can trigger sharp price drops and sentiment shifts that make the market question the company’s overall quality. Their more volatile earnings amplify these swings. Assuming a certain revenue rebound and normalized profitability based on historical performance, we find many smaller quality companies to be trading at very attractive valuations. However, today’s pessimism toward this group prevents such assumptions from being reflected, as if yesterday’s quality small-caps have suddenly become mediocre forever — at least that’s what current valuations suggest.
The key question for investors, then, is when to give companies the “benefit of the doubt” — that is, to accept an explanation for why current earnings are temporarily depressed. In today’s environment, many small-caps are being denied that benefit, even though they have repeatedly proven their ability to navigate tough periods. This is where one must dare to be contrarian: to look beyond the market’s short-term judgment and trust that quality companies with solid track records can recover once again.
In hindsight, it’s fair to say we were on to something.
Fund perfomance and contrinution to results
Kavaljer Investmentbolagsfond delivered a positive return of +2.9% during the month. Since the fund’s inception in May 2018, its total return amounts to +150%, compared with 100% for the Stockholm Stock Exchange (OMXSPI-GI) and 87% for the global index.
The largest positive contributors among the fund’s holdings during the month were LVMH, Investor, and Danaher, contributing +0.7, +0.5, and +0.4 percentage points respectively. The largest negative contributors were Fairfax Financial Holding, Berkshire Hathaway, and VNV Global, each contributing -0.3 percentage points.
Portfolio changes
During the month, we reduced our holdings in Beijer Alma, VNV Global, LVMH, and Microsoft, and sold our positions in Exor and Medcap. We also increased our holdings in Vitec, Linc, Idun Industrier, and Latour, as well as initiated a new position in Bure Equity. Later in this letter, we provide a more detailed discussion of our decisions to sell Exor and buy Bure. A brief summary of these discussions follows below:
Sold Exor: We have sold our entire position in Exor, which has been part of the portfolio since March 2024, primarily for three reasons:
Ferrari, representing 48% of Exor’s net asset value, has lowered its long- term growth guidance from 9% to 5.5%, increasing the risk of multiple contraction given its elevated valuation. Stellantis continues to face challenges related to losses, excess inventories, and declining market share — particularly in North America — while the outcome of its recently announced $13 billion investment program remains uncertain. Several of Exor’s turnaround holdings may require additional capital infusions, which could weigh on future returns.
Overall, despite Exor’s substantial discount to net asset value, we see limited upside potential and an elevated risk level going forward.
Bought Bure Equity: Bure has had a weak 2025, which has led the share to trade at a historically low premium to its net asset value. At the same time, we believe several of the company’s core holdings are entering a more positive phase, as outlined below:
Mycronic – A global leader in advanced mask writers, with an effective monopoly in Pattern Generators. The third quarter showed a strong recovery with order intake of SEK 2.4 billion and structural demand driven by the OLED, AI, and VR/AR markets. The stock trades around EV/EBIT 20x, slightly below its historical average — which we find attractive given the company’s current technology cycle.
Vitrolife – The global leader in IVF, serving 75% of the world’s clinics. While 2025 has been marked by temporary headwinds in the U.S. and China, the market continues to grow structurally by 5–7% per year. As volumes normalize, margins are expected to strengthen, and the valuation at EV/EBIT ~24x 2026E remains well below historical levels.
Xvivo Perfusion – A global leader in organ perfusion with solutions for lungs, heart, liver, and kidneys. Sales have been temporarily affected by disruptions in the U.S. transplantation system, but the underlying drivers remain intact. With upcoming launches of Heart Assist and Kidney Assist, the addressable market is expected to more than double, while the current valuation reflects only the lung business.
In summary, we see strong potential for recovery and revaluation during 2026, and we believe Bure is well positioned for a clear rebound in the coming year.
Bure Equity represents 0.91% of the Kavaljer Investmentbolagsfond.
The fund’s equity exposure was 97%.
|
|
|
|
Discount/Premium in Our Investment Companies
The discounts or premiums of investment companies relative to their net asset value (NAV) indicate how much investors are paying for the underlying assets. Current discounts or premiums can help identify suitable timing for investment or divestment. These levels typically do not change rapidly but can vary significantly over the years. However, the most important factor when selecting an investment company is the expected future NAV growth — that is, how effectively the company is expected to increase the value of its underlying assets. Historical NAV growth can serve as a useful guide in this assessment.
Bure and Latour have historically demonstrated strong NAV growth and have therefore traded at high premiums in the past. As shown in the chart below, these premiums are now significantly lower than their average levels over the past five years. This has contributed to our decisions to invest in Bure and increase our position in Latour.
Since last month, the largest changes have been observed in Investor and Byggmästare AJ Ahlström, where the discounts have narrowed. The discount in VNV Global remains at record levels, despite previous divestments made at or near net asset value and despite ongoing share buybacks.
Current discounts and premiums for several investment companies can be found at ibindex.se
|
|
|
|
|
Comments
In line with the previous month, most of our investment companies continue to trade at significant discounts — in several cases, higher than their five-year averages. Below are some selected comments on individual holdings:
Spiltan Invest: Spiltan Invest has long served as a stable cornerstone in many portfolios, but its share performance has been more uneven recently, mainly due to its core holding, gaming company Paradox Interactive, which has experienced delays in releases and mixed reception for some titles. However, we now see brighter prospects ahead. Paradox has several exciting game launches scheduled for Q4, with early reviews being positive, while also releasing new expansions for existing titles. At the same time, Spiltan has actively reduced its NAV discount through share buybacks totaling SEK 465 million between summer 2024 and April 2025, which increased NAV per share by roughly SEK 10 when the shares were cancelled. A new buyback program is in place until the 2026 AGM. All in all, we have strong confidence that the discount in Spiltan will gradually narrow over time. Linc: Linc is currently trading at a discount to its net asset value — a shift from the historical premium the stock has typically commanded. This discount likely reflects the weak sentiment in the life science sector and market uncertainty regarding the valuation of its unlisted holdings. At the same time, Linc holds approximately SEK 1.2 billion in available cash for new investments, which is particularly interesting as valuations within life science have fallen significantly and several attractive opportunities are emerging. For the long-term investor, we see an appealing entry point in Linc at these levels — offering exposure to a high-quality portfolio of life science assets at a discount, while the company retains “dry powder” to invest when the market stabilizes. Svolder: The discount can primarily be explained by the weak performance of the small-cap segment in recent years. Looking ahead, we believe small-cap companies are due for a rebound — and when that happens, Svolder stands to benefit. The company holds a portfolio of several high-quality investments, including New Wave and ITAB, which we see significant potential in.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In-Depth Reflections on Our Holdings
Sold Exor:
Exor has been part of the Investment Company Portfolio since March 2024. We have now decided to sell our entire holding in the company, primarily for three reasons
Weaker outlook for key holding Ferrari: Ferrari is the crown jewel of Exor’s portfolio, representing about 48% of its net asset value, resulting in limited diversification. During the company’s Capital Markets Day on October 9, 2025, Ferrari presented new guidance projecting revenue growth of 5.5% per year through 2030 — a marked downgrade from the previous 9% target set in 2022. While Ferrari has a history of conservative guidance and overdelivery, we believe that the current high valuation and elevated expectations leave little room for disappointment, increasing the risk of multiple contraction going forward.
Uncertainty surrounding Stellantis: Stellantis is one of the world’s largest automakers, with brands such as Jeep, Ram, Dodge, Peugeot, Citroën, Fiat, and Opel. Recently, the company has faced several challenges, including significant market share losses in key regions. The North American division reported an operating loss of €1 billion in H1 2025, compared to a €4.4 billion profit the previous year — driven by product gaps and excess inventory. Many brands within the portfolio are struggling to compete against intensifying global competition, particularly from China. Furthermore, Stellantis recently announced a $13 billion four-year investment program aimed at relocating production from Mexico to the U.S. to avoid tariffs, launching new models, and expanding production capacity to regain lost market share. We view these investments as difficult to assess, and it will likely take considerable time before the results become visible. Turnaround focus with significant capital needs: Beyond Stellantis, Philips is also facing challenges related to quality issues within its medical technology division, necessitating substantial operational measures. We believe these turnaround efforts are likely to require additional capital injections from Exor in the future.
Exor has long traded at a steep discount — averaging around 30% since 2009 — and currently trades at roughly a 58% discount to its net asset value. In practice, this means investors are effectively paying for Ferrari and getting the rest of the portfolio for free. At first glance, this may seem appealing; however, the uncertainty surrounding several of the portfolio companies remains high, and the heavy concentration in Ferrari results in limited diversification. Against this backdrop, we have therefore chosen to sell our entire position in Exor.
Bought Bure Equity:
Bure Equity is a Swedish investment company focused on long-term ownership investments in Nordic companies within the healthcare and technology sectors. Bure has had a notably weak 2025 so far, which has led the share to trade at a historically low premium to its net asset value.
|
|
|
|
|
Bure’s weak performance this year can mainly be explained by declines in several of its major holdings: Xvivo –62% (4% of NAV), Yubico –61% (7%), and Vitrolife –33% (15%). At the same time, Mycronic, which accounts for nearly half of the company’s net asset value, has risen 11% year to date. Below is our view on some of these holdings.
Mycronic – at the center of the next wave in display technology
Mycronic develops and sells advanced production equipment for the electronics industry, including mask writers used in the manufacturing of displays and semiconductors. Within its core business area, Pattern Generators (PG), the company holds a virtual global monopoly.
With roughly half of Bure’s net asset value invested in Mycronic, the company’s future performance will be a key driver for Bure’s overall development. We find Mycronic particularly interesting at this point for the following reasons:
Order intake accelerating: After concerns about missing PG contracts during Q2 and the summer, Q3 showed a clear turnaround with an order intake of SEK 2.4 billion (+67% vs. Q3 2024) and a recovery in the backlog to SEK 4.8 billion (up from the Q2 low of SEK 4.1 billion). Notably, the quality of these orders signals structural demand rather than cyclical volatility. Three Prexision contracts (advanced mask writers for OLED displays, where Mycronic holds a monopoly) were signed, reportedly without discounts — indicating that Mycronic does not need to cut prices to win business. Additionally, one SLX (semiconductor mask writer) was delivered immediately after qualification — an unusually rapid turnaround that, according to analysts we have spoken with, suggests urgent customer demand.
New technology cycle driving structural demand: Mycronic is in the midst of a multi-year technological upgrade phase. While LCD still dominates the display market, the shift to OLED is now accelerating from premium segments (smartphones) to mainstream products (laptops, TVs). Combined with AI-driven demand for advanced components in data centers and new applications within VR, AR, and XR displays, this is fueling structural growth for Mycronic.
Attractive valuation: Mycronic currently trades at EV/EBIT 19.8x on a trailing basis and around 20x on 2026 consensus estimates — slightly below its five-year average of 22–24x. We believe the stock is now priced at more attractive levels, particularly given the company’s ongoing technology upgrade cycle.
Vitrolife - quality in a temporary downturn with clear recovery potential
Vitrolife is a global leader in products and systems for fertility treatments (IVF). The company offers everything from nutrient solutions and disposable lab materials to advanced technologies such as time-lapse systems and genetic testing. Vitrolife is the market leader, serving 75% of the world’s IVF clinics, with sales in over 125 countries.
The year 2025 has been marked by challenges across the company’s key markets. In the U.S., patients have postponed IVF treatments following President Trump’s “IVF Executive Order,” awaiting clarity on reimbursement systems — resulting in fewer treatment cycles. In China, fertility activity has slowed after the temporary baby boom during 2024 (“Year of the Dragon” in the Chinese zodiac) and has yet to return to normal levels. Additionally, significant currency headwinds have weighed on earnings.
We view 2025 as a transitional year for Vitrolife, with temporarily slower growth but intact structural drivers. The global IVF market is expected to grow 5–7% annually, driven by urbanization, rising maternal age, and greater access to fertility care worldwide. Today, less than 1% of all children are born through IVF, indicating massive long-term potential. As volumes normalize, we expect economies of scale and product mix to boost both growth and profitability. The stock is now trading at much more attractive levels, with consensus estimates valuing Vitrolife at EV/EBIT 24.5x for 2026, well below its 10-year average of 46.7x and 5-year average of 51x.
Xvivo Perfusion - temporary weakness creates an attractive entry point
Xvivo Perfusion develops and sells advanced systems and preservation solutions used to maintain and enhance donated organs outside the body prior to transplantation. The company is the global leader in lung perfusion and also offers solutions for heart, liver, and kidney preservation. In short, Xvivo’s technology extends the lifespan of organs, enables quality control, and increases the number of organs suitable for transplantation.
After a long period of stable organic growth, Xvivo’s sales suddenly declined in Q2, showing –11% organic growth, driven by temporary disruptions in the global transplantation market — particularly in the U.S., which accounts for more than 60% of the company’s total sales. The slowdown in the U.S. is mainly explained by:
The impact of the weaker transplantation flow was further amplified by Xvivo’s heavy dependence on its largest customer, Lung Bioengineering (LBE), which accounted for roughly half of lung volumes in 2024. When LBE experienced lower volumes in early 2025 — due to reduced activity in the transplantation system and a period of inventory build-up — the company quickly scaled back its orders. This led to a 19% decline in Xvivo’s lung sales in Q2.
We view these weaknesses as temporary and largely beyond the company’s direct control — a combination of external factors rather than operational issues. For investors willing to take a longer-term perspective, the investment case remains intact and can be summarized as follows:
Leading technology in a global niche with strong medical need
Xvivo is the global leader in machine perfusion. Today, only about 10% of the global demand for organ transplants is met, creating a structurally growing market. -
Several new product launches in the pipeline
-Heart Assist (EU 2026, U.S. 2027)
-Kidney Assist (U.S. 2026)
These products are expected to more than double Xvivo’s addressable market
while reducing its dependence on the lung segment.
-
Attractive valuation following the share price decline
After a roughly 60% drop in 2025, Xvivo is now trading at levels where, in our view, the lung business alone justifies the current valuation, while the growth projects in heart, liver, and kidney perfusion are effectively valued at zero.
Overall, we see significant potential for Bure to rebound in 2026 and recover from the past year’s weakness.
Bure Equity represents 0.91% of the Kavaljer Investmentbolagsfond.
Our Selected Earnings Comments
Investor: As usual, Investor delivered a solid quarterly report, with adjusted NAV increasing by 7% in Q3, corresponding to a total return of 5%, compared with 3% for the SIXRX benchmark. Unusually, however, Investor is lagging its reference index by roughly 5% year to date. That said, history speaks for itself — the company has outperformed the market for 13 consecutive years, and we believe Investor will regain its former momentum going forward.
LVMH: In Q3 2025, LVMH returned to 1% organic growth after a weak first half (–3%), driven by recovery across all core markets. Management remains cautiously optimistic about the future but notes that market conditions remain challenging. With easier comparison figures ahead in 2026 and a gradually improving consumer environment, we remain confident in LVMH’s prospects.
Danaher: The Q3 report was somewhat mixed. Growth was driven primarily by the Biotechnology segment, supported by consumables rather than new equipment. Life Sciences continues to be weighed down by weak biotech funding and excess inventories, while Diagnostics remains pressured by China’s volume-based procurement policies. Nevertheless, the Danaher Business System (DBS) continues to deliver productivity gains and strong cash flow. Management expects a gradual recovery toward 2026 as bioprocessing strengthens and markets normalize, though uncertainty remains given current tariffs and the investment caution they have created among customers.
VNV Global: VNV Global is trading at a 44% discount to NAV, despite 80% of the portfolio now being EBITDA-positive. Portfolio profitability has improved with over 40% growth between 2024 and 2025. One of the main holdings, Voi, shows strong momentum with 31% revenue growth, a 17.3% EBITDA margin, and positive cash flow. Looking ahead, a potential IPO of Voi could unlock significant value and narrow the NAV discount, as a market valuation would better reflect the portfolio’s true worth.
Sdiptech: During Q3, Sdiptech’s restructuring efforts began to bear fruit. Management has refocused the portfolio around 30 core companies, separating 11 low-margin legacy assets for divestment, which led to a SEK 500 million goodwill write-down. The core business remains solid, achieving 9% organic growth in Q3, despite a challenging market environment.
Berkshire Hathaway: Berkshire’s reports rarely contain major surprises, and this time was no exception. What stands out, however, is the company’s cash position, which now totals approximately SEK 3,625 billion (!) — equivalent to about 30% of the entire Stockholm Stock Exchange’s market value at mid-2025. It will be very interesting to follow how this substantial cash pile is allocated in the coming periods.
|
|
|
|
|
Kavaljer Investmentbolagsfond vs Benchmark indexes
|
|
|
|
|
|
|
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 916 million
Morningstar Rating ⭐️⭐️⭐️
|
|
|
|
“It is always easiest to run with the herd; at times, it can take a deep reservoir of courage and conviction to stand apart from it. Yet distancing yourself from the crowd is an essential component of long-term investment succss.”
Seth Klarman
|
|
|
|
Nacka Strand 5 November 2025
Peter Lindvall, Håkan Telander, Jesper von Koch, Jakob Wahlberg |
|
|
|
|
|
|
|
|
|
|
|
|
