February began with a continuation of the positive sentiment that prevailed at the start of the year. Quite quickly, the mood shifted according to a familiar pattern – rising long-term interest rates dampened risk appetite, and the stock market gave back all that it had gained initially during the period. And then some.

Each reporting period over the past two years has seen companies generally deliver good results with strong revenue growth and stable or improved margins as a general rule. There have been exceptions each time, but when summarizing individual reporting periods, we have found between three and six times more "good" than "bad" reports compared to our own expectations. Now, most of the results for the full year of 2022 have come in, and the fourth quarter's results do not deviate from the established pattern. Two-thirds of all results came in roughly as expected, with four times as many clearly positive as negative variances.

Over the past 24 months, we have essentially experienced cognitive dissonance in each reporting period, seeing the combination of strong results and falling stock prices. This is not unusual in itself – often, stock performance is short-term decoupled from company fundamentals and more driven by flows and, ultimately, sentiment, emotions, and what we call animal spirits. It becomes truly interesting only when combining several reporting periods in a chain and looking at cumulative development over several years.

In June, it will be three years since we launched the TIN World Tech fund. By the end of February, the fund's NAV had increased by less than 10 percent in value. How does that compare to the profit development in the companies in the portfolio? What did the profits look like in 2019, which we looked back on at the start of the fund? And how have profits developed up to 2022, which we will look back on at the fund's three-year anniversary?

By comparing profits in 2022 with those for 2019, we temporarily remove the pandemic and its effects from immediate focus and can better assess the structural development of the companies. A study of the 20 largest positions in TIN World Tech, portfolio-weighted, shows that operating profits have increased by an average of 80 percent over these three years. This means that profits have increased well over 20 percent per year on average (21.6 to be exact). Two conclusions can be drawn: 1) the health of the companies is good, and 2) the market values the companies' profits significantly lower than three years ago.

Looking at the TIN Ny Teknik fund, the corresponding figure for portfolio-weighted growth, adjusted for increases in the number of shares in companies that have used their own shares for acquisitions, is a whopping 200 percent! The variance around the average is high: while Kindred has actually decreased its profit over these three years, for example, Genovis has increased its profit by 17x. The fund's largest holding, Evolution, has increased operating profit from 150m EUR in 2019 to over 900m in 2022. The variance around the average is large, and the median provides a more accurate picture. Seen in this way, the profit increase is 130 percent, which can be translated into an annual growth rate of 32 percent. Looking at the fund's performance since the launch of TIN World Tech, the NAV is just over 6 percent lower now. Again, we can only draw the conclusions that the companies have performed well and that retrospective valuation is significantly lower today than in June 2020.

We are aware that good organic growth in companies has been complemented by positive currency effects during the period from 2019 to 2022. A risk to future profit growth is if, for example, the US dollar were to weaken significantly from current levels. Virtually all companies have reported currency effects on sales, but too few have been transparent about the impact on operating profit. We believe it would be a good thing for more companies to clearly report currency exposures to avoid difficult future discussions.

TIN New Technology
During the past month, the fund's NAV increased by 0.3 percent. During the same period, the performance of the broader comparative index for Nordic small caps, VINCSCN, was +0.8 percent. Over the last 12 months, the fund has decreased by 19.3 percent, compared to -0.7 percent for the index. Since the fund's inception on February 4, 2019, the fund has increased by 47.2 percent, while the index has risen by 60.4 percent. The three largest holdings in the fund at the end of the month were Evolution, Embracer, and Surgical Science. For a list of the ten largest holdings, please visit tinfonder.se/innehav-tnt/en.

The holdings that contributed most to the return during the month were Surgical Science, Evolution, and Paradox Interactive. Among the holdings that had a negative impact during the month, we find Sinch, Chemometec, and Cint. The largest segment of the fund is Health, which constitutes 31 percent of total assets under management, followed by Software at 30 percent, and Digital Brands at 22 percent.

TIN World Tech
During the past month, the fund's NAV decreased by 3.2 percent. During the same period, the performance of the comparative index MSCI World was -3.0 percent. Over the last 12 months, the fund has decreased by 14.3 percent, compared to +8.8 percent for the index. Since the fund's inception on June 12, 2020, the fund has increased by 10.0 percent, while the index has increased by 46.3 percent. The three largest holdings in the fund at the end of the month were Solaredge, Salesforce, and Microsoft. For a list of the ten largest holdings, please visit tinfonder.se/innehav-twt/en.

The holdings that contributed most to the return during the month were Teamviewer, Palo Alto Networks, and Ansys. Among the holdings that had a negative impact, we find Volue, Nintendo, and Globus Medical. The largest segment of the fund is Software, which constitutes 47 percent of total assets under management, followed by Health at 22 percent, and Digital Brands at 14 percent.