There are some really great titles. I'm a big Sweden fan myself, as I lived in Stockholm for two years. What does our Scandinavia expert @Raketentoni have to say about it?
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@Keineui I'm traveling for work until tomorrow, so I'll take a look at the Fteitag post
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•@Keineui
Mr. Prompt pours himself an ice-cold Swedish filter coffee. ☕
Someone has written a really nice, romantic bullshit bingo story. "Hidden bottlenecks" and "deep tech incubator" - it reads like he's found the holy grail of European technology.
Let's run this text through the incorruptible AOK scanner and separate the Swedish romanticism from the harsh reality of the stock market. Here's your ammunition for an ice-cold response:
1. the Sweden illusion (Wild West instead of incubator)
Yes, Sweden has an extremely high number of tech spin-offs, often from universities (Lund, Chalmers) or as spin-offs from the old Ericsson structures. But the truth is: the Swedish First North and Spotlight market is the absolute wild west of Europe. The hurdles for an IPO are so low there that it feels like every research group with a patent and a prototype goes directly to the stock exchange to finance itself via retail investors. This is not an exclusive "incubator", it is simply outsourced venture capital on the backs of small investors.
2. the bottleneck fallacy (moat vs. supplicant)
The author claims that these companies are "bottlenecks". Wrong! A true technological bottleneck is characterized by absolute pricing power (like ASML or Nvidia). If these Swedish micro-caps were real bottlenecks, they would print gigantic, positive margins.
The reality: they are tiny component suppliers or IP licensors that have to scramble on their knees to get a Tier 1 manufacturer (like Apple, Samsung or a major car maker) to even include their sensors (Acconeer) or antennas (Sivers) in a design. They have zero pricing power until the final breakthrough and almost all of them have a disastrous, blood-red balance sheet.
3. the ice-cold reality check on his examples
Sivers Semiconductors (SIVE): Respect for his trade! The share has indeed escalated completely in recent months (from below SEK 3 up to the 80s). This is a momentum gamble of the century! But: Fundamentally, this is an operational bloodbath. The operating margin is a whopping -58%! They are burning massive amounts of cash. Anyone who doesn't take ice-cold partial profits here (as the author fortunately did) will be wiped out on the next pullback.
Obducat (OBDU B): The mother of all value traps. They have been telling the story of nanoimprint lithography for 20 years, endlessly diluting shareholders with ever new capital increases and showing an absurd "return on capital" of almost -2000%. This is not a bottleneck, this is a money-burning furnace for naive hopeful buyers.
Hexatronic (HTRO): Finally a real company on his list that is making profits. But the story here was the massive fiber rollout during the pandemic. After that, the share price collapsed in a beastly fashion.
4. the hard AOK quality formula
If we apply my Core Quality Formula (revenue growth + operating margin), almost all of these "deep tech" wonders fall through the 25-point hurdle. Why? Because the deeply negative operating margin mathematically eats up even the smallest sales growth immediately. My exclusion rule applies mercilessly here: Story > Numbers.
Mr. Prompt's conclusion
The author is 100% right about one thing: he treats them as a risky addition and takes profits. This is excellent risk management for the speculative Side B. But the hidden moat story is dangerous.
Mr. Prompt pours himself an ice-cold Swedish filter coffee. ☕
Someone has written a really nice, romantic bullshit bingo story. "Hidden bottlenecks" and "deep tech incubator" - it reads like he's found the holy grail of European technology.
Let's run this text through the incorruptible AOK scanner and separate the Swedish romanticism from the harsh reality of the stock market. Here's your ammunition for an ice-cold response:
1. the Sweden illusion (Wild West instead of incubator)
Yes, Sweden has an extremely high number of tech spin-offs, often from universities (Lund, Chalmers) or as spin-offs from the old Ericsson structures. But the truth is: the Swedish First North and Spotlight market is the absolute wild west of Europe. The hurdles for an IPO are so low there that it feels like every research group with a patent and a prototype goes directly to the stock exchange to finance itself via retail investors. This is not an exclusive "incubator", it is simply outsourced venture capital on the backs of small investors.
2. the bottleneck fallacy (moat vs. supplicant)
The author claims that these companies are "bottlenecks". Wrong! A true technological bottleneck is characterized by absolute pricing power (like ASML or Nvidia). If these Swedish micro-caps were real bottlenecks, they would print gigantic, positive margins.
The reality: they are tiny component suppliers or IP licensors that have to scramble on their knees to get a Tier 1 manufacturer (like Apple, Samsung or a major car maker) to even include their sensors (Acconeer) or antennas (Sivers) in a design. They have zero pricing power until the final breakthrough and almost all of them have a disastrous, blood-red balance sheet.
3. the ice-cold reality check on his examples
Sivers Semiconductors (SIVE): Respect for his trade! The share has indeed escalated completely in recent months (from below SEK 3 up to the 80s). This is a momentum gamble of the century! But: Fundamentally, this is an operational bloodbath. The operating margin is a whopping -58%! They are burning massive amounts of cash. Anyone who doesn't take ice-cold partial profits here (as the author fortunately did) will be wiped out on the next pullback.
Obducat (OBDU B): The mother of all value traps. They have been telling the story of nanoimprint lithography for 20 years, endlessly diluting shareholders with ever new capital increases and showing an absurd "return on capital" of almost -2000%. This is not a bottleneck, this is a money-burning furnace for naive hopeful buyers.
Hexatronic (HTRO): Finally a real company on his list that is making profits. But the story here was the massive fiber rollout during the pandemic. After that, the share price collapsed in a beastly fashion.
4. the hard AOK quality formula
If we apply my Core Quality Formula (revenue growth + operating margin), almost all of these "deep tech" wonders fall through the 25-point hurdle. Why? Because the deeply negative operating margin mathematically eats up even the smallest sales growth immediately. My exclusion rule applies mercilessly here: Story > Numbers.
Mr. Prompt's conclusion
The author is 100% right about one thing: he treats them as a risky addition and takes profits. This is excellent risk management for the speculative Side B. But the hidden moat story is dangerous.
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@Raketentoni Exciting counterpoint. I actually agree with you about the risks of many Swedish small caps. The difference for me is that I am not primarily looking for quality companies today, but for technologies that could create bottlenecks in the future. That's why such stocks only end up as small scouts in my portfolio and not as anchors.
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