At the outset, the managers note that the Stockholm Stock Exchange performed strongly in December, climbing 2.3 percent. The Small Cap Index rose by 0.3 percent, while the World Index increased by 0.9 percent. For 2025 as a whole, the Swedish stock market gained 12.8 percent, the Small Cap Index rose by 1.9 percent, and the World Index by 20.0 percent.
"This year's outperformance of the Large Cap Index compared to the Small Cap Index was record-breaking, and a lukewarm interest in small cap funds has led to outflows, which have pushed down share prices in already depressed small cap stocks."
It is further noted that the fund's significant proportion of small caps in its portfolio partly explains the negative relative return compared to the Stockholm Stock Exchange.
The managers go on to state that their strategy is to invest in undervalued or reasonably valued quality companies, where quality is primarily defined as the ability to increase earnings per share over time.
When assessing quality, the managers primarily consider the companies' financial history, which is said to reflect underlying factors such as business model, corporate culture, and competitive advantages. They then analyze whether any fundamental changes have occurred that could negatively impact the company's future performance.
The managers highlight the fund's largest holding, Securitas, which on the surface may appear to be "a classic boring company that certainly won't be a rocket." However, according to the managers, it is an unusually stable and predictable company with a broad customer base. Revenue amounts to about 160 billion kronor, and profitability has improved, with an adjusted operating margin of 7.2 percent and a long-term target of 10 percent.
Despite its high stability and improved profitability, the managers say the stock is trading at a low valuation, leading them to see significant upside and a price of at least 200 kronor per share.
The managers also see great potential in the fund's third-largest holding, Carasent, which at first glance may seem like an expensive speculative stock. However, they believe the company's accelerating growth, high scalability, and large loss carryforwards point to strong earnings and cash flow development in the coming years. By mid-2028, the managers expect to see a share price of around 80 kronor, compared to 27 kronor today.
The largest contributors during the month were Bravida, Inwido, and Nilörngruppen, while Pandora, ITAB, and Bonesupport weighed most on performance.
The largest holdings in the fund's portfolio at the end of the month were Securitas, Ratos, and Carasent, with weights of 5.0, 4.6, and 4.6 percent, respectively.
| Kavaljer Quality Focus, % | December, 2025 |
| Fund MM, change in percent | 3.2 |
| Fund full year, change in percent | 10.6 |
