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Hans-Marius Lee Ludvigsen

Hans-Marius Lee Ludvigsen is lead Portfolio Manager for DNB Fund Nordic Small Cap.

Hans-Marius joined us in 2019, as part of our Nordic Equities team and Portfolio Manager of DNB Fund Nordic Small Cap. He then came from a position as a sell side equity analyst at Swedbank/Kepler Cheuvreux (2015-2018) and as an analyst in a Nordic equity fund in Pareto Asset Management (2018-2019).

Hans-Marius holds an MSc in Finance from the Norwegian School of Economics (NHH).


Analysts and asset managers are currently increasingly focusing on the small cap segment. In fact, now is a particularly good time to bet on small businesses. Nordic small caps are currently trading at around 13 times of next year's earnings per share, which represents a record discount to their higher-cap counterparts. At the same time, small Nordic companies are expected to continue to grow faster than large caps. This makes them particularly attractive for investors who want to add high-growth stocks to their portfolio. Swedish small caps look particularly promising at the moment, as they have underperformed larger companies in 2022 and 2023. This has led to historically low valuations. We believe that the Swedish market can recover strongly once interest rates have peaked.

Admittedly, it has already become apparent over the past 18 months that small-cap companies with debt on their balance sheets have been more affected by higher financing costs. Nevertheless, we believe that these companies will see a rebound once interest rates stabilise.

Low valuations in the gaming sector

A slowdown in the economy could have a double impact on Nordic small caps: as companies are highly dependent on exports, directly, and through investor sentiment, indirectly. Regardless of this, this investment universe comprises 2,000 companies that offer a wide range of opportunities. Time and again, windows of opportunity arise to identify companies that are less vulnerable to economic downturns and even thrive in turbulent times.

Among the most interesting sectors is the fast-growing gaming industry. Mobile and video games do not only offer an affordable form of entertainment with a variety of attractive facets. They also bring people together, provide exciting challenges and hold a competitive advantage. The gaming market in particular is likely to continue to gain structural importance. Moreover, the gaming industry is characterised by a highly scalable business model driven by digital distribution, which brings significant economies of scale. We expect a resurgence in demand from gamers, which has slowed somewhat after the Corona boom.

In addition, we observe a pronounced appetite for content among strategic players and expect further market consolidation. Recent examples are the acquisition of Activision by Microsoft and the increasing gaming efforts of companies like Amazon and Netflix. This development points to a growing market. The sector is particularly interesting for investors thanks to its low valuations. Over the next 12 to 18 months, this is likely to be driven by increasing merger and acquisition activity, supported by cheap valuations for small-cap companies and stabilising financing costs.

Positive outlook for software

Turbulent phases in the market, as is currently the case, are often an opportune time to acquire high-quality companies at significantly reduced prices. One example is the Swedish media corporation Embracer Group, which bought the trademark rights to "Lord of the Rings" in August last year. Here, the ongoing restructuring measures are likely to unlock significant value. In addition, recent game releases have been very strong, so we expect this could boost the share price. Despite the recent weak share price performance, Embracer has a valuable portfolio of IPs and a rich games catalogue. The intrinsic value clearly exceeds the current share price.

The software sector also appears promising. Swedish software-as-a-service company Pagero, for example, is positioned at the forefront of the digitalisation and compliance megatrend, has robust growth and is currently investing heavily in its leading position in a growing market. Current key metrics - led by high customer retention rates and strong trend growth - underline that Pagero deserves a higher valuation.

Another example of a company that is overlooked by the market is the Humble Group, also based in Sweden. The company is committed to enabling products and brand potential in the functional food, organic, sustainability and vegan (dairy and meat free) sectors. The consumer goods company has impressive operating results, has successfully overcome its balance sheet challenges and is valued very cheaply at current trading levels. In our view, the fair value is 50 to 100 per cent above the current share price.

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