Fund manager interview: ”Right now, we pay special attention to valuations.”

Lannebo Europe Small Cap is still relatively new, but the fund has gained a lot of attention, particularly in recent months given the fund has placed at the top in the performance tables, and it is frequently added to fund experts' recommended portfolios. Read the interview where the fund managers share their thoughts on investing with a long-term horizon while carefully balancing risk.
Carsten och Ulrik by car ny hemsida

Carsten Dehn and Ulrik Ellesgaard manage Lannebo Europa Småbolag, which is up 24.31% YTD. How do you explain the increase?

– The main explanation for the fund’s high return so far this year – 8 percent over the index – is our stock picking. Out of Europe’s 8,000 small caps we have selected approximately 40, where 94 per cent of them have reported better or in line with expectations for Q4 2016 and Q1 2017. We have a strict discipline for both buying and selling our holdings, which has generated good returns.

What do you see as the challenge for finding investment opportunities right now?

– In general, there are many exciting investment opportunities in Europe. As an asset manager, the foundation of our investment philosophy is to pick companies where the fundamentals are promising, that are market leaders and that we believe have good growth opportunities. We encounter interesting investment opportunities all the time. We are now paying particular attention to valuations – it is important to find the balance between a company’s fundamentals and its valuation on the stock market. When the market is booming, there are, of course, companies that are overvalued – and we do not want to overpay. But with an investment universe consisting of eight thousand small caps there are always investment opportunities and we find ourselves in a “sweet spot”.

Which industries do you see as most promising over the next six months?

– We are over-weighted in engineering and specialized finance companies, for example credit management and fin tech. The business environment is good in Europe and markets are strong – which gives small caps an advantage. Europe represents 70 per cent of revenues for Europe’s 8,000 small caps, while European large caps have 70 per cent of their sales outside of Europe. So, if you want exposure to Europe, which you want, then small caps are the way to go.

Tell us about some of your portfolio companies.

– Asetek is a company that successfully combines innovative technology solutions with a leading environmental philosophy. They provide cooling systems for servers and computers worldwide and enable powerful energy conservation, improved performance and a greener planet. Asetek is a good example of companies we like – they are market leaders in a well-defined segment, they have a strong balance sheet and they make environmental challenges and sustainability part of their business model.

– Another favourite is Aumann, which also represents energy efficiency and, among other things, provides equipment for large scale production of electric motors. We participated in the company’s IPO and we are positive about the investment. Aumann has a strong position within a segment that we believe in, and the company expects a 40 per cent annual growth rate over the next five years.

What differentiates your approach to working with fund management?

– We are genuinely driven by active management which for us means being extremely disciplined in our investment process, maintaining a long-term view and being conscious of any risks.

The latest monthly report of Lannebo Europe Small Cap

Related articles

Öhman new main owner in Lannebo Fonder

When Öhman becomes the new main owner of Lannebo Fonder, the result will be the Nordic region's largest independent fund manager and an even more powerful offering to customers. "The companies are a perfect fit...

Read more

Strong start for Lannebo Europe Green Transition

September was another negative month for the stock market. But Lannebo Europe Green Transition has nevertheless got off to a good start. "Falling prices always mean opportunities," say the managers....

Read more

Lannebo launches fund focusing on Europe’s green transition

September sees the launch of the Lannebo Europe Green Transition Article 9. An UCITS equity fund that will invest in small and mid caps that contribute to Europe's green transition....

Read more

New director of institutional sales in Denmark: Philip Garde

Philip Garde is leading the efforts to reach out to institutional investors in the Danish market....

Read more

Lannebo Recruits new head of sustainability from Nordea

Lannebo recruits Katarina Hammar as new Head of Sustainability and Corporate Governance. She joins from Nordea Asset Management, where she was Head of Active Ownership. ...

Read more

Lannebo Sustainable Nordic Equities fund awarded by Lipper

Lannebo Norden Hållbar was awarded as the best Nordic Equities strategy by Refinitiv Lipper. "We've had the courage to go our own way", fund manager Charlotta Faxén says....

Read more

Small caps for the long term

Investments in small caps has been at the heart of Lannebo's management since the company was founded two decades ago. Today the successful strategy is headed by Per Trygg. A fund manager who has his...

Read more

Lannebo Räntefond Kort awarded “Best swedish fixed income fund”

Focus on risk and stability makes Lannebo Räntefond Kort the best swedish bond fund in 2021, according to Fondmarknaden. ...

Read more

Citywire: “Nordic apetite for bite-sized businesses”

Per Trygg manager of the small cap equity fund Lannebo Småbolag interviewed in Citywire. ...

Read more

Lannebo recruits Jessica Malmfors as the new CEO

Lannebos board of directors appoints Jessica Malmfors as new CEO. Jessica Malmfors most recently served as CEO of Nordea Investment Management. ...

Read more