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Protecting risk groups and keeping the economy as open as possible is absolutely correct, according to Christer Gardell. But the implementation of the Swedish krona’s strategy receives a lower F rating from the financier. – I think it was shit, he says.
Financier Christer Gardell, who recently celebrated his 60th birthday, often works in tennis clothing during the pandemic so that he can quickly get out onto the tennis court when the workday is over.
Teleworking and video conferencing have characterized Christer Gardell’s 2020. He has gotten used to it quickly. And he acknowledges that videoconferencing is here to stay.
– It seems that this will affect business travel significantly, he tells TT.
– Suddenly, companies receive a receipt for how much they spend on travel and conferences. The savings have been very great for many companies and I think many company managers want to keep part of that money in the future, he adds.
During the first wave of infection this spring, he handled most things remotely, from his home in Båstad.
– It’s the bike that counts. “I never think I have ridden as much as this year,” he says.
But now, in the middle of the second wave of infection, he has moved back to Solsidan’s house in Saltsjöbaden. And there is the car that applies to the office in central Stockholm.
– From an investment perspective, the year has been surprisingly good, considering everything that has happened there, says Gardell.
Cevian Capital is roughly 10 percent above the benchmark this year, thanks in large part to cuts made after the stock market crashed from shiny, algorithm-based money at the start of the COVID-19 pandemic. , according to Gardell.
– We transferred quite a few shares of what had worked well to shares that we thought were extremely cheap. So we were quite active during the first turbulent phase. And it was a pretty good action, which explains part of our result this year.
Does Cevian Capital benefit from this type of crisis?
– It is both a positive and a negative. When the market has just launched, like in March, then you have the opportunity to buy stocks at prices that don’t really exist. But it is important to have the money and it is important to have the nerves. Most people get extremely nervous in these situations.
At the same time, all the uncertainty and worries are negative for large deals, investments, and mergers.
– If there is too much uncertainty, do not do business. Then the market dies.
– A big problem that goes wrong often leads to people being fired. Therefore, boards and executives become very cautious when it comes to too much turbulence.
However, in late fall, it has started to slacken, according to Gardell, with Alfa Laval’s bid for engineering firm Neles and another bid for Trygg Hansa’s owner, RSA Insurance Group, which is listed in London.
Cevian Capital is larger in both Neles and RSA, but also has large holdings in some of the most traded stocks on the Stockholm Stock Exchange, such as ABB, Ericsson and Nordea.
Gardell believes that both the portfolio of companies and the M&A market will strengthen in 2021 and 2022. He also takes the opportunity to rejoice a bit about the change of power in the United States, where Joe Biden will assume the presidency in January after four years with Donald Trump.
– Of course, for American companies, Trump reduced the tax. But from our perspective, as an investor in Europe, the concerns that have continually spread in the corporate world and in the stock market have been negative.
– Now we expect greater predictability and better relations between different countries of the world. I think it will be favorable for the stock market.
When TT asks Gardell to rate Sweden’s crisis management, he approves of the Riksbank, with Stefan Ingves. It’s okay to watch out for negative interest rates, you think. Watch the crown, warn at the same time.
– So that it does not become too strong and has a tightening effect on the economy. Then you may have to think one more lap.
According to Gardell, Finance Minister Magdalena Andersson (S) has also managed the crisis management perfectly well with the right kind of support measures, although she expects more from that side.
– It is good not to throw everything away at once and I hope that Magdalena Andersson does what is asked of her.
– Unemployment has risen, so I think more will be required. So I believe more in broad investments in infrastructure that create jobs.
However, the Swedish crown’s strategy is problematic, thinks Gardell, who jokingly describes himself as one of all the amateur epidemiologists in the pandemic.
In theory, the strategy is correct, according to Gardell.
– You should protect the elderly and risk groups and then you should try to keep the economy open as much as possible, to minimize financial damage. The formulation of the strategy I give the grade A.
– But the most important thing about a strategy is that it be implemented effectively. Everything is in the implementation. And there it is failed – F.
Poor preparation despite decades of pandemic warnings was the first hit, according to Gardell.
– There were no masks, no clothes. There was total panic at first.
Shock number two occurred, according to Gardell, when the elderly and risk groups would be protected.
– There was no plan on how to protect the elderly, given the look of the structure. So it’s just a highway with infection straight to all of the elderly care in March and April.
– It was not news that care for the elderly was structured in that way, with that type of staffing and so on, he adds.
Gardell believes, above all, that it failed due to the absence of an extensive Swedish test and infection monitoring operation.
– I’m sorry you weren’t ready for everything. And then they have worked in slow motion. Everything takes so long.
It also lacks a clear responsibility.
– Given what it looks like in Sweden and given the planning and organization, it is actually the wrong strategy. It would have been the correct strategy if we had been prepared for this. But since we weren’t prepared at all, it will be the wrong strategy.
– We would probably have a strategy more similar to Finland, Norway and maybe Denmark. With the results in hand, that conclusion is pretty clear.
Investments of 130 billion
Cevian Capital is a financial company with so-called activist funds, with significant stakes in listed European companies. The general strategy is to create long-term value through active ownership.
Active ownership is exercised by acquiring large stakes in what are considered undervalued listed companies and working with company boards and management to achieve efficiency measures.
The portfolio includes holdings in telecommunications maker Ericsson, automation group ABB, steel conglomerate Thyssen Krupp, major bank Nordea, insurance group RCA, and automotive technology companies Autoliv and Veoneer, as well as engineering firm Neles.
The fund was founded by Lars Förberg and Christer Gardell in 2002 and currently manages investments of more than € 13 billion (equivalent to just over SEK 130 billion).
Source: Cevian Capital
