Monthly letter
1 MAR 2024

February 2024 – Business-critical software wins

During February, the vast majority of companies presented their results for the fourth quarter and full year of 2023. Similar to many times before, our overall impression was overwhelmingly positive, with the difference that companies delivering strong figures were now also generously rewarded by the stock market. The difference was most evident at the beginning of the month when most of the funds' larger holdings reported. Towards the end of the period, unfortunately, we also had to note some disappointments. Overall, the positive momentum we saw in January continued, and we are pleased with a really strong start to the year.

In TIN New Technology, the companies in the portfolio have delivered three to four times more positive reports compared to the number of negative reports over the past three years. For Q4, the ratio was "only" slightly more than twice as many positive reports as negative ones, based on our qualitative traffic light system. Looking solely at the fund's ten largest holdings, which now constitute 53 percent of the total fund assets, the ratio was much better.

Novo Nordisk, the fund's largest company and now Europe's largest company by market capitalization, led the way with 43 percent currency-adjusted growth in the fourth quarter and 36 percent growth on a full-year basis. Much of the growth is driven by the US market and treatments for obesity. The company expects growth in the range of 18 to 26 percent for 2024. The outcome will largely depend on the company's ability to produce and deliver finished products, as demand far exceeds supply (Novo and competitor Eli Lilly together have supplied products covering only a fraction of the underlying needs). Of particular interest is Novo's main owner, Novo Holdings, acquiring Catalent, a well-established contract manufacturer with over 50 production units worldwide. Three of these units will be separated and acquired by Novo Nordisk. The units will fulfill existing contracts (including with Novo) until 2025/26 and thereafter exclusively serve Novo's own growth. The deal is interesting in at least two dimensions. Firstly, it demonstrates the strength of the company's ownership governance model and the symbiotic relationship between Novo Nordisk and the main owner, Novo Foundation (via the ownership company Novo Holdings), the world's largest charitable foundation. Additionally, it addresses a strategic key issue for Novo Nordisk: securing the ability to deliver more products - and thus growth in revenue and earnings - beyond 2026. For us as long-term investors, this gives us a little more confidence to "stretch the ruler" with a little more self-assurance, for a few more years.

Evolution also delivered solid growth, albeit not at the level of historical almost supernatural figures. Revenue increased by just under 17 percent during the fourth quarter, estimated to be around 25 percent adjusted for a stronger Euro. Despite a negative currency effect, margins increased, indicating that the scale effects from volume and price were stronger than the headwinds from FX. We have touched on the theme of a stronger krona/weaker dollar several times in previous monthly newsletters. The main reason is primarily communicative - companies have a lot to gain from transparency. A positive currency effect on sales, which most companies report, often translates directly into operating profit. Very few companies have reported these effects clearly. Sectra is a commendable exception that we are happy to highlight. If and when the currency trend reverses, stock prices may be more negatively affected than they were positively affected when the currency provided a tailwind. Again, unless one has been clear and transparent. Returning to Evolution, which reports in EUR, like most companies, they have commented on currency effects only on revenue. It was a positive "dog that didn't bark" in the report that the negative impact on sales did not result in a corresponding negative impact on the company's results. After the report, towards the end of February, Evolution announced that an investigation into allegations that the company had misconducted itself in New Jersey had been dropped without action. In addition, the company announced that it had entered into a strategic partnership with Caesars Digital, which means a broadening of the relationship to cover the entire North America. The company's operations in the USA are still in their infancy. The agreement, analogous to the reasoning in Novo Nordisk, gives us reason to set a direction for Evolution that has a more positive slope than what we have seen as reasonable before.

Sometimes one is misled to see an antagonistic relationship between long-term thinking and activity. Depending on how one defines activity, we believe that these concepts are rather complementary. Even if one has a long-term investment philosophy, necessary adjustments may need to be made, and these require activity. Active share is a portfolio concept that measures how much a fund deviates from its benchmark index. From this perspective, activity and long-term thinking go well together. Although we maintain our long-term focus in our investments, there are some specific short-term activities in the portfolio that we consider worth highlighting.

In early January, a bid was made for Kindred. We conducted intensive analysis to explore whether there might be better alternatives than selling the fund's shares. Our assessment led us to believe that the bid is most likely to be accepted. However, there is a risk that the funds may not be available to shareholders until as late as December. Consequently, we decided to divest our holdings in Kindred during the period and instead increased our positions in Fortnox, Sectra, and QT Group. In the extremely short term, this decision proved successful, as both Fortnox and QT Group saw significant increases after their reports. What these three companies have in common is that they provide business-critical software. The prospect of a catastrophe for customers if the software were shut down, the lack of viable alternatives, or significantly inferior alternatives to their own offerings—these attributes hold particular appeal. Moreover, all three companies likely have a long way to go on their respective growth journeys.

In TIN World Tech, surprises were fewer, with a clear bias towards positive reports. Palo Alto Networks was a notable exception. The company, which was one of the top performers in the fund last year with a 63 percent increase, reported 19 percent growth and strong profitability for its second quarter (their fiscal year ends in June), in line with the 20 percent growth seen in the September quarter. Palo Alto is a leading company in cyber security. We appreciate their breadth, with strong positions in several verticals. Cyber security is always a relevant topic and is particularly "hot" now in a more challenging geopolitical environment. Therefore, it shocked the market to hear them talk about "spending fatigue" among customers and guide for only 10 percent growth for the full year. The stock fell 27 percent in a day, from a level near an all-time high. Since then, it has recovered over half of that decline. We see the attraction in cyber security—back to mission-critical software—but we are humble in the task of finding the right companies. The industry is broken down into distinct verticals, and often medium-sized companies (and upwards) can have over 100 different suppliers in the field. "Everyone" sees the long-term growing need and opportunities for innovation, which means that startups specializing in a particular area often receive backing from venture capital firms. All else being equal, this makes the cyber security world even more fragmented. However, Palo Alto remains, at least for now, a medium-sized holding in the fund.

The Dutch software company Adyen is a relatively new addition to the portfolio. The company operates in payments, a highly lucrative market that has attracted Per and Paul and all their cousins. Why? Simply because the opportunities are so enormous—payments are something each of us does practically all the time, every day. From the perspective of TAM—total addressable market, startup lingo for how large the potential market is—there is hardly anything bigger to tackle. At the same time, it is a more complex market than one intuitively imagines, with many more steps and components in what we all perceive as a simple transaction. The fund has previously held two positions in payment software. Firstly, Pushpay from New Zealand, which dealt with digital collections along with other services for churches, and secondly, the Australian company Afterpay, whose business model resembled that of Klarna's. Pushpay was bought out by private equity in 2023. In 2021, Square (later renamed Block) made a bid for Afterpay.

Adyen has grown between 33 and 46 percent annually and nearly quadrupled its revenue between 2019 and 2023. The growth is entirely organic and driven by the company's internally built unified platform. This contrasts with many competitors that have grown through acquisitions, leading to friction in integration and less scalability. Most competitors are also local or regional, while Adyen sees that their unified tech stack works globally. The company originated in e-commerce but has developed solutions for point-of-sale (POS) in physical retail as well. They do not offer the cheapest solution but emphasize a superior total cost for the customer, especially as more transactions go through and end consumers are more satisfied, leading to more repeat customers. The valuation reflects expectations about the future, but the multiples have the potential to quickly decrease. Looking at absolute market valuations, industry giants Visa and Mastercard trade at ten times higher multiples than Adyen. If Adyen manages to maintain its technological advantage (and it becomes difficult for anyone to catch up) and successfully execute its land and expand strategy in the future, that relationship could very well change. We see Adyen as a potential ultimate winner in a large and profitable market.

On the payments theme, we have noted how well Klarna is currently doing and that they seem to be heading towards an IPO. Both of these developments are very encouraging, and it will be exciting to see how the second truly big name of the Swedish startup generation (besides Spotify) will be received. As shareholders in Adyen, we have every reason to hope for a good development in Klarna. The two have a fruitful partnership after Klarna stopped its efforts to create its own PSP—payment service provision. It's better to join forces with the one who does this the best.

Returning to reports, there was no company that attracted more interest than Nvidia. Expectations were high, the anticipation palpable. There were many things to worry about—the valuation, would it allow for exceeded expectations? How would geopolitics and restrictions on sales to China impact? Customer concentration is high, and the customers are among the largest companies in the world. Several of them have initiatives aimed at replacing Nvidia or at least competing with them. One factor that was given significant importance is what the industry calls inference. No one questions that Nvidia's products are superior in training AI models and systems. But it has been suggested that other semiconductors and solutions would be more effective in inference, that is, when throwing new information at an existing AI. However, the company exceeded all expectations and reported that 40 percent of demand came from inference applications. This buried, at least temporarily, concerns about competition in this area.

TIN New Technology
During the last month, the fund's net asset value increased by 2.2 percent. During the same period, the broader comparative index for Nordic small caps, VINXSCN, saw a growth of +1.1 percent. Since the fund's inception on February 4, 2019, it has increased by 53.4 percent, while the index has risen by 66.3 percent. The three largest holdings in the fund at the end of the month were Evolution, Novo Nordisk, and Surgical Science. For a list of the top ten holdings, please visit

The holdings that contributed the most to the returns during the month were ChemoMetec, Evolution, and Fortnox. Among the holdings that had a negative impact during the month, we find Surgical Science, Genovis, and Take-Two Interactive. The fund's largest segment is Software, which constitutes 38 percent of the managed capital, followed by Health at 35 percent and Digital Brands at 13 percent.

TIN World Tech
During the last month, the fund's net asset value increased by 3.4 percent. During the same period, the value development of the broader comparative index MSCI World was +2.7 percent. Since the fund's inception on June 12, 2020, it has increased by 34.6 percent, while the index has risen by 80.2 percent. The three largest holdings in the fund at the end of the month were Microsoft, Salesforce, and Novo Nordisk. For a list of the top ten holdings, please visit

The holdings that contributed the most to the returns during the month were Nvidia, Xero, and Salesforce. Among the holdings that had a negative impact during the month, we find Take-Two Interactive, Adobe, and Nordic Semiconductor. The fund's largest segment is Software, which constitutes 58 percent of the managed capital, followed by Health at 22 percent and Digital Brands at 10 percent..

Carl Armfelt
Erik Sprinchorn


Risk information
Historical returns are no guarantee of future returns. The money invested in the fund can both increase and decrease in value and it is not certain that an investor will get back all the invested capital. Please read Fact Sheets (PRIIP) and prospectuses available on our website or contact a distributor.
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