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Peab is building everything

Carnegie Småbolagsfond rose 1.1 percent in February while the small cap index was down 1.1 percent and the broad Stockholm index was down 0.7 percent.

Nordax was the month’s best holding after a bid from Nordic Capital together with Sampo. The process started in mid-October last year when Nordic Capital bought into the company and we considered the probability of a bid as high. We invested in Nordax because the company was well-run and had good management. We have owned shares in the company since the IPO and our total return has been good. The stock rose 14 percent in February and we have sold our holding.

Peab rose 13 percent in February, driven by a report that was better than the market’s expectations on the vast majority of points. Strongly simplified, we could say that Peab is building everything in Sweden aside from exclusive condominiums in Stockholm, and we think this is good exposure. There is a great need to invest in infrastructure, public buildings, offices and even housing, albeit perhaps not exclusive condominiums in Stockholm. Peab covers all this. We believe that the company’s focus on profitability and risk management in recent years has the potential to continue to generate good profitability. In light of this, the stock is attractively valued. The share rose 13 percent in February.

Staffing company Uniflex, one of the fund’s smaller holdings, had a good month and the share rose 13 percent. The company reported a good profit for the final quarter of last year. More important, however, was the news that the German operations were sold. Uniflex’s German operations have long reported major losses and the news is extremely welcome. Now the company retains its main Swedish business, which is performing well. In addition, there are activities in Norway and Finland, which are also moving in the right direction. The company looks much better without the German millstone, and the valuation is low. Uniflex’s focus on construction, warehousing and industry should have good prospects in the medium term.

The fund’s largest holding, Catena Media, reported a strong end to 2017. The report for the last quarter of the year beat expectations and its prospects are bright. In February, the company conducted a bond issue and thus has significant financial capacity. We see a high probability of continued value-creating acquisitions. The company has also recruited a new CEO, Per Hellberg, who in recent years has been a successful chief executive of news app Readly and also has considerable experience in the gaming industry. We do not know Per Hellberg, but he looks good on paper. The acting CEO, main shareholder Henrik Persson Ekdahl, has done a great job but there has never been talk of him being anything other than acting, and Per Hellberg seems to be a good hire.

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Småbolags­fond

Carnegie Småbolagsfond invests in smaller value companies on the Stockholm Stock Exchange. Such small caps have historically had stronger share price growth than larger companies, partly because they have more opportunities...

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