The fund's investment philosophy

The Redeye Nordic Hidden Champions Fund embodies a simple philosophy: invest in Nordic entrepreneurs committed to building scalable and resilient wide-moat businesses while avoiding questionable enterprises. The fund is intrigued by the resilience of these wide-moat models, especially those of global players with hard-to-imitate products in structurally growing niche markets. Their potential for outperformance can be particularly potent when run by owner-operators who have lots of skin in the game and excellent capital allocation skills. The mission of the fund is to grow alongside these hidden champions, creating wealth for fund unitholders.

The fund's objective

The objective of Redeye Nordic Hidden Champions AIF is to secure long-term returns in Nordic listed equities. The fund's focused strategy targets underappreciated nordic hidden champions—market leaders providing sophisticated and mission-critical niche products or business services that often remain hidden to the average consumer. Investing at an earlier stage or the tipping point in the long-term growth trajectory of hidden champions has proven rewarding, provided one can stay patient and let the power of compounding do its work. Moreover, the outcomes are not solely tied to economic conditions, but rather structural growth, offering potential de-correlated returns.

Sustainability view & ESG classification

The fund is ESG unclassified, as per the definitions of the Sustainable Finance Disclosure Regulation (SFDR). Instead, the fund has its own interpretations of sustainability. For example, the fund has since inception viewed a viable defense industry for protection of democracies as the very foundation for a sustainable world. Yet, investing in defense companies was unthinkable for most funds prior to the invasion of Ukraine in February 2022.

The fund's sustainability analysis is focused on material sustainability issues that have a pathway to becoming financially material to companies. Debates surrounding the path to financial significance often revolve around the time horizon. In the long run, companies should thrive by serving all stakeholders well, including society. Most societal and stakeholder issues tend to be resolved over time through government actions, individual efforts, innovation and technology. Eventually, these issues become financially relevant to companies and their shareholders. Hence, identifying material sustainability issues is synonymous with identifying financially significant sustainability issues.

Therefore, the fund strongly believes that sustainability analysis plays a crucial role in assessing the risk associated with a company’s fundamentals. Neglecting material sustainability factors may result in an incomplete understanding of risk and poor risk-adjusted returns. Sustainability issues can be misunderstood, and they may evolve over time. Consequently, businesses currently facing material sustainability issues can present attractive investment opportunities when there is potential for improvement, which can drive financial performance and improve perception of the company. In short, the fund believes companies which are exhibiting good, or improving sustainability characteristics make for more attractive investments.