The philosophy in a nutshell

NORDIC QUALITY FOCUS

The fund invests in stocks of Nordic quality companies that are expected to benefit from long-term global and domestic structural trends. The fund only invests in stocks considered by the investment committee to have above-average potential for share price appreciation.

FOCUSED, DISCIPLINED, SPECIALISED
The focus is on high quality growth companies and taking a disciplined approach with highly selective investment criteria and a rigorous research process. The fund uses a thematic overlay to our investments based on long-term trends where Redeye's analysts have a specialised expertise and deeply understanding from the industry verticals they cover.

QUALITY FIRST
The fund believes in the importance of investing in high-quality businesses with defensible franchises, attractive long-term growth potential and attractive returns on invested capital because high-quality businesses generate greater compounding of wealth over time. High quality business are often leaders in their niche markets, with resilient wide moat businesses that are run by owner operators with unusually excellent capital allocation skills.

SMALL/MICRO-CAP FOCUS
The primary focus is on Nordic small- and micro-cap stocks (as defined by MSCI), which usually offer more attractively valued investment ideas. In addition, smaller and mid-sized companies tend to have more growth optionality with their products for other markets.

CONCENTRATED PORTFOLIO
Concentration is critical for the fund in achieving the goal of superior returns and makes it easier for the fund to stay on top of all the portfolio holdings to maintain superior understanding of the businesses. The strategy is to limit investments to a relatively small number of the best opportunities. This means holding around 15 positions at any time that are yet diverse in terms of business maturity, sectors, and between defensive and cyclical stocks in response to the prevailing stage in the economic cycle. Consequently, the fund do not just combine the top ideas coming from Redeye' analysts, but the best combination of ideas. Still, the coverage universe of Redeye and investment criteria will inevitably lead to a concentration in certain sectors.

Note: Most mutual funds own anywhere from 50-100 stocks with few exceptions. Still, good investment opportunities are rare, so most fund managers end up diluting their best ideas with mediocre picks. The fund believes this is foolish ‘diworsification’ and reflects closet indexing rather than prudent money management.

SEAMLESS DECISION MAKING
The investment team is lean, nimble, and tight-knit with tremendous transparency and trust. The emphasis is on a one-team approach to generate faster decision-making and enhanced insights.

Investment Universe

>300 stocks

• Backed by secular growth themes
• Traded, or soon to be, on any of the Nordic bourses
• Covered by Redeye directly or indirectly as a competitor or peer company, alternatively part of a targeted theme

Fundamental research

>150 stocks

• In-depth qualitative analysis (conducting onsite visits, channel checks etc.)
• Quantitative analysis (valuation)
• Each Redeye equity analyst is responsible for 7-10 companies

Investment opportunities analysis

>50 stocks

• Assess quality, timeliness and valuation (proprietary methods)
• Risk & liquidity analysis
• Assessment of portfolio fit (mega trends, cyclicality etc)
• Concentrated portfolio where the position sizing is based on conviction and downside probability

Sell discipline

• Deterioration of fundamentals or management team
• Overvaluation
• Emergence of better investments
• Change of expectations due to new info or views