Investor AB - 2024 Update
Shareprice +25%. Underlying profits +12.5%.
Investor delivered another robust performance in 2024. Underlying profits increased by 12.5%, while the share price rose by an impressive 25%.
Over the past three years, underlying profits have compounded at approximately 18% annually, with the share price growing at 7%. Taking a longer perspective, five-year figures show profits compounding at 15% annually, and the share price at 14%. Although share price movements often deviate from profit growth in the short term, it’s important to recognize that over the long term, these metrics tend to align. In addition, Investor pays out a dividend, often yielding between 1,5 - 2,5%.
In previous writeups, I have outlined how the different parts of Investor have contributed to the 20% annual returns for shareholders over the last decade. But for now, let’s see how 2024 went for the different legs of Investor.
Portfolio Profit Breakdown
Investor's limited trading activity allows us to use its current ownership stakes as a reliable proxy for evaluating the performance of its subsidiaries. The breakdown below highlights the primary contributors to operating profits. Key drivers include Patricia, Atlas Copco, ABB, and SEB. Encouragingly, all major holdings have demonstrated strong performance, reflecting solid development across the portfolio.
For 2024 specifically, these were the YoY growth in operating profits for each:
Patricia: +23%
EQT: +61%
Atlas Copco: 0%
ABB: +11%
AstraZeneca: +29%
SEB: -1%
Epiroc: -6%
Saab: +26%
Nasdaq: +2%
Sobi: +24%
Wärtsila: +85%
Ericsson : +31%
Patricia and EQT remain standout performers within the portfolio. Notably, Investor also holds funds in EQT alongside smaller positions in less successful companies, such as Husqvarna. However, due to their relatively minor weighting, these holdings have limited impact on overall performance and cashflow to Investor.
Investor’s Cashflow
CEO Christian Cederholm said in a recent podcast (link below) that the primary reason for setting up Patricia Industries, was to have their own cashflow engine. Below, you can see how much Patricia now contributes to their cashflow, enabling Cederholm & Co to reinvest more capital themselves. Remember, Investor pays out most of the dividends (red line) they receive from the listed portfolio, a headwind for the reinvestment engine.
For this year, dividend amounts to 5,20 SEK per share, an 8% increase from 2024, roughly around the dividends they will receive from their Listed Portfolio this year.
Besides this cashflow, it is crucial to remember that the Listed Companies themselves don’t distribute 100% of earnings. This is what I’ve referred to as the dual reinvestment engine in the first writeup on the swedish holding company.
Let’s also take a quick glance on the numbers behind each subsidiary. While these don’t include dividends distributed, spinoffs or asset sales, they portray important details of each company - competetiveness, margin stability and ability to compound capital by itself. A quick glance over each of the 10 graphs below indicates that the last 3-5 years have been particularly strong for Investor’s portfolio holdings.
Patricia Industries
The primary reinvestment engine for Investor in recent years, continues to deliver stellar returns, both organically and through add-on acquisitions.
EQT AB
EQT delivered its strongest value creation in three years, with fund exits rising to €11 billion, driven by successful IPOs like Galderma, and long-term MOIC guidance for BPEA VIII upgraded to "Above plan." The firm raised €30 billion in 2024 and targets €100 billion in the next 3–4 years, underscoring private markets' recovery.
They also acquired a stake in a company I’ve had on my watchlist for a long time, OEM International. Will be interesting to see what’s in stall for the Swedish compounder (19% CAGR last 30 years), which may be taken private by EQT.
Industrial Technology
The industrial technology firms are undoubtedly performing well, boasting strong margins, solid growth, and strategic positions in sectors with lasting tailwinds. However, like many companies within Investor AB's portfolio, they often operate behind the scenes and don't frequently feature in daily headlines.
Financial, Healthcare & Telecommunications
The same can be said for these giants. AstraZeneca drives growth with innovative therapies, SEB excels in financial stability, Nasdaq anchors global markets, and Ericsson shapes future connectivity.
There are some more portfolio companies, but these have relatively low weighting in the portfolio. Of these, Sobi & Wärtsillä delivered excellent results in 2024 and may become larger dividend contributors in the future.
Capital Allocation
To round off, let’s visit where the Wallenberg’s have invested capital. On a more personal basis, most of management have continued to purchase shares of Investor on the open market. A great sign, increasing their skin in the game.
For the listed portfolio, Investor invested additional capital pf 1,6B SEK in May 2024, at 62.7 SEK per share. So far, this investment has returned >30%.
Within EQT, there were significant gross investments into their funds.
Within wholly-owned Patricia, add-on acquisitions within Mölnlycke (PGF Industry solutions), Piab (Alum-a-lift + FeiYun), Sarnova (One Beat + QuadMed), resulted in a total spend of 3.8B SEK on cashflow. Additionally, there were some contributions to Vectura, partly to develop a 5,700 sqm. world-leading lab for nanoscience in Lund.
Below, you can also see a few examples of organic initiatives within Patricia holdings.
Importanty, these organic investments are an important growth driver for Patricia, and a notable example this last year was Optilume by Laborie. If Patricia was listed on the public market, it would without a doubt be classified as a top notch serial acquirer, with a wide toolbox to generate shareholder value going forward, in attractive niches.
Thanks for the update !