What originally got you into investing?

Investing in equities is almost a national sport in Sweden. Some blame the high taxes for the fact that the horse track and the stock market are among the few places still left to get rich. My first investment was in high school and, unsurprisingly, it was in the Swedish telco equipment and mobile phone maker, Ericsson¹ (a tech stock darling at the time).

I opened an account with the Swedish Young Shareholders' Association, a cheap way to buy and sell stocks. It was thrilling trying to understand as well as constantly track the performance variables of the companies that were eating all my pocket money. I’ve been hooked ever since.

What makes a good stock?

A good stock, for me, is one I can see myself owning for a long time – a business that gets better as it grows, not just bigger. Good management is an outsized part of that. I am no expert in running any of the businesses I own, so when I invest in a company, I invest just as much in the people who run it. They shape the culture, and that matters a great deal for long-term success. That's why I like founder-led businesses, not empire builders.

What’s your biggest lesson learned over the years?

Get comfortable with being uncomfortable. That includes asking questions – even when you appear to be the dumbest person in the room. Not asking can get expensive.

To many, the circular economy may seem like a niche theme. How do you find the breadth to keep up with broader markets?

The circular economy is a theme, but it’s neither niche nor narrow. At its core, circularity is about efficiency – getting more out of less in every process, in every part of the economy. The earlier in the value chain it’s applied, the bigger the impact. As a result, the theme runs through every sector and region globally, and that is where the breadth comes from.

Why would an investor choose Circular Economy over other ecological or environmentally themed strategies?

The Circular Economy strategy’s mid- and small-cap focus is a true differentiator compared with many global products, including both regular global funds and environmental strategies. We have also shown that we can adapt and seize opportunities as they appear.

This year, an important source of alpha² has been AI-bottleneck companies, many of them in Asia, while in 2022 – with Covid lockdowns still in place – the strategy had a clear defensive tilt. The strategy is broad, flexible and truly active; we are not governed by the large weights in global indices.

Lastly, I strongly believe the thematic lens works to our advantage. It strengthens our selection process by pointing us to companies that bring real value to their customers. Those are the companies that can profitably outgrow GDP over time.

What are the key structural trends driving demand for circular economy solutions?

Many mistakenly assume top-down regulation is a driver, but economics is actually a far more powerful incentive.

Being circular is the same as being smart and proactive. For example, in a world where resources are scarce and supply chains are regularly disrupted, recycling materials simply makes business sense. So, the move toward circularity is driven by companies themselves, striving to become more efficient, save money and build resilient supply chains.

How have you overcome concentrated market leadership, first from megacaps and more recently from the AI trade?

A market driven by a handful of stocks is probably the toughest environment there is for a diversified, mid-cap-focused strategy like ours. During the years when the Magnificent Seven dominated, we still benefited from strong stock selection outside that limited cohort.

Understandably, relative returns lagged the MSCI World somewhat, but we were largely in line with, or ahead of, the global categories.

Fortunately, this year, market narrowing has been driven by a few themes rather than a few stocks. The AI trade is also broadening and our breadth of coverage across market caps, regions and sectors has meant we could embrace it rather than skirt around it. Early in the year, the AI enablers were companies showing exceptional profit growth at reasonable valuations. We leaned into that and benefited as the market gained confidence in their earnings strength.

Toward the end of H1, however, the AI theme was running hot. As investors grew more enthusiastic, they cared less about valuations and the risks that narrow positioning brings.

Not every AI company is worthy of investment, but AI demand is real, spreading, and delivering efficiency and innovation. That presents excellent opportunities for balanced exposure between AI enablers and AI adopters beyond the tech sector.

At the end of the day, we stay active but we also stay true to the theme. That combination keeps us adaptive, yet disciplined on the fundamental criteria a holding must meet to make it into the portfolio.

What’s been your best investment ever?

I tend to remember the worst but those also count toward lessons learned. One positive instance that springs to mind is my purchase of Nvidia* well before it became part of the Magnificent Seven. At the time it was largely a gaming company, but the pivot toward accelerated computing had begun, and the potential of GPUs beyond graphics was becoming visible.

Management is always part of my thesis, and here it was central: a founder-led business, with Jensen Huang seeing the shift years before the market did. I sold too early. Sometimes the hardest part of a great investment is simply holding on to it.

If you could meet any historical figure who influenced the financial world, who would it be and what would you ask?

Howard Marks's book, ‘The Most Important Thing’, is instructive, as it challenges investors to go beyond consensus thinking, and consider second-level effects of trends or events. It also stresses the trap of human emotions that sometimes sabotage good investing. I still read his memos, which are great at cutting through the noise and distilling what really matters. If we met, I’d like to know how he tells the difference between being early and being wrong real-time, not in hindsight.


This was originally published in our Fundamental Equity Quarterly for Q4.

*The companies named on this page are for illustrative purposes only. No inference can be made on the future development of the company. These are not buy, sell or hold recommendations. Footnotes

¹ The companies named on this page are for illustrative purposes only. No inference can be made on the future development of the company. These are not buy, sell or hold recommendations.
² Alpha refers to the excess return of an investment relative to a benchmark index and is a measure of performance.