Christer Gardell, finansprofil och grundare av aktivistfonden Cevian, intervjuades på Di:s Börsdagen den 31:a maj. Han delger sina tankar om börsläget, bubbelvarningar, kryptovalutor och Cevians tyngsta innehav - som AB Volvo.

"Bubblan har blåsts ur till hälften", säger han om börsnedgången sedan årsskiftet. Och kryptovalutor "har inget värde", enligt finansnestorn. Samtidigt är han optimistisk till dom egna innehaven trots motvindarna i konjunkturen.
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You can have it, if you want to remember.

This is a picture from a poll we did this morning.

We asked everyone what they thought of the year 2022.

In the middle, a large dose of optimists.

15% think we should close the year at plus.

And only 1% think we should wait for a hard melt.

But it feels like it's turning right now.

Many of our guests in DITV talk about that we have reached a bottom, and the stock market has, with the exception of today, still been looking up.

I wonder what you think of the market temperature right now?

I think that this situation is extremely difficult to predict.

If the US increases aggression against China and China starts to isolate more and more, then it doesn't look fun at all.

But I would say that as an investor, I think that it is 1 of the most difficult markets we have had in the last 30-40 years.

It is difficult to see exactly what will happen, but if I look at the stock market from a scenario that I see as most likely, a large part of the stocks on the stock market, which I call the traditional, real companies that generate cash flow, that have existed for a long time and will continue to exist in the future.

They were actually quite cheap before the budget.

You can buy Ericsson for example for an enterprise value against an EBIT multiple of 516, if you look at

If you list up companies like Volvo, Trelleborg, SKF, Autoliv, etc.

Those companies are also cheap in tougher macroeconomic scenarios.

So I think we should start to clamp in now, I think.

We've been in a market where greed has massively overpowered fear for many, many years now.

It's been an ultra-light monetary policy, and we have seen these hope companies grow like mushrooms in the ground.

I was involved in investing during the previous big bubble, the IT and telecom bubble in

The lesson there is that when the bubble is going, it is not going 55%, but

I would say that we are halfway in terms of bubble emptying.

A large part of the stock market will still go badly.

I think that a large part of the stock market will be able to do well from here.

And then the question, to answer this 1, what will land here?

I don't think there will be any major movements from this point on.

But I think that 1 part of the stock market might be doing well during the rest of the year, but there are large parts of the stock market that you should be careful with and stay away from, because you will continue to lose money.

I think that in general, you should look at the bubble price, Bitcoin is going down below

The SPAC activity is going to stop, and it has already done that.

It is a phenomenon that appears when you spend money and people become extremely greedy and speculative.

I think Tesla shares are also a symbol for the bubble has gone down 50% from the top.

I would say it must go down another 60 percent.

It would be good to have a checklist of these 3 pieces.

If we have met them, we can almost blow the danger away.

But it was an incredibly large bubble that had blown up, and it must be blown out completely.

From a long-term investment perspective, these are excellent buying opportunities.

You will look back in 5 years and say, oh my god, I bought Ericsson for EB multiple 5.

Even if you buy a little too early, in 5 years we are...

You will never know if it is a good deal in 1, 2 or 3 months, but in 5 years I can almost guarantee that it will be a great deal.

It sounds like CWN has acted quite differently in 2022 compared to 2021.

The market has been in a kind of hope, hoping for profit in the future.

You give the benefit of the doubt to the companies you are inflating.

It's a kind of a fake market, and it shows up a bit every now and then.

Our business has always been to invest in cash flows.

But we have seen a big change in the market.

Some companies in the portfolio are relatively cheaper or more expensive.

So the activity to move around in the portfolio has been higher in 2022 compared to

Something we are thinking a lot about is whether a possible cash-out or continued inflation pressure will affect the company's profits, even for the type of quality companies you mentioned, Swedish base industry.

Are you worried that the PE figures, even if you use the diameter, will have to change because the profits will go down?

The values, as I said, it's hard to judge how this will play out.

But I think that if you look at inflation, interest rates, and so on, I think that we will see a certain decrease because of the inflation on the consumer side.

But You should remember that a large part of the inflation problem is on the export side.

The supply chain, logistics, delays after the pandemic and the demand has increased more than planned.

As for COVID, the West has come out and China is still there.

China is an important supplier of many goods.

I expect that the export side will be solved for large parts during the year.

If you compare that to the demand side, there is a certain reduction.

This means that inflation will come back.

I think we can see the top inflation figures now.

I expect it will come back quite strongly during

And I think the interest rates we see in the market today are probably the rates we will see in the future.

I don't think there will be any big increases in interest.

Of course, the Riksbank will increase its interest a bit, but if you look at what the market is pricing for interest, I think the market is reasonably correct in the levels that are out there right now.

Unfortunately, the participants on the floor demand that we step back.

The band has received several questions about Bitcoin.

Why is the price of Bitcoin an important indicator of the bubble?

There is no underlying asset, no underlying cash flow.

There is no 1 who can answer that question, because it is just speculation.

And the reason why there is still some activity in Bitcoin is that it is still so-called decentralized finance, which means that it's free in front of the cloud.

It won't be allowed to do business for much longer.

When the rules come against Bitcoin, and you put the same rules as against the banking system to prevent cash laundering and money being moved back and forth, the market will die and thus the value will disappear.

Is it so much more strange than paying 500 million for a Mondrian or a Picasso?

As long as others think there is a value, there is, even if it is subjective.

Yes, but I think in this case it is actually nothing.

You mentioned Volvo, among other industry companies.

We have written about Cevian's interest in making a comeback in Volvo in today's industry.

Looking at the future prospects for Volvo, I think it looks exciting.

The demand for the existing cars is very strong.

The order book is full for the next 2 years.

You also have 2 technology companies that will drive the demand even more.

1 is that you can get in hydrogen and electricity in the engines, and that forces the customers...

Most companies out there, when you look at their emissions, the big boom is logistic emissions.

And you find a solution to replace diesel, the automakers will be forced to switch to that alternative, because all customers will demand that alternative.

The next step in the development is autonomous driving.

There is a huge lack of truck drivers all over the world.

I think this development will drive the government to release or enable self-driving cars much earlier than expected.

And then, in the next technical shift, you will be forced to replace the entire park again.

So, you have a strong underlying park demand, then you have electrification, hydrogen gas, and then self-driving cars.

And this can hold a strong demand for companies like Volvo for the next

Today, they buy on EBIT multiple of 8 next year.

It sounds like you've already thought about Volvo.

The challenge for the company is to work out the value.

There are some companies that are always cheap.

But I think if you can get it out, and if what I'm saying is true, there should be a case here that is real growth, not IT-hoping growth, which doesn't usually exist in the end.

This can be real growth that gives real cash flow.

Speaking of expectations, you mentioned Tesla as a bubble indicator.

Tesla is well ahead in self-driving cars.

Tesla is a great company, but it's too expensive.

All-stars, they will have a strong position in the future, but the car industry is a tough industry.

And if you look at electric cars compared to combustion engines, there are several actors in electric cars.

There was a hard competition, hard margins over here.

There will be more competition, tougher margins over here.

So There is no reason to change the value so much over time.

In the past, the car market was extremely low-value.

I'm sure that it will be drawn into a more normal car market in a short time.

Can you give a short reasoning on the other Volvo?

We have 2 companies with the same name on the stock market.

Is Volvo less interesting because of the European market?

I think it's more of a consumer business, where the consumer is more price sensitive.

Because the trucks are a well-structured industry globally.

It's quite structured in North America, South America and Europe.

So I think the market discipline is much better there.

Carriages are a tougher industry and it is also more connected.

Autoliv doesn't have a content, can we say, regarding vehicles.

Maybe it hasn't developed as well as we could wish.

of the world market share in crotch hoods.

You make a decent 10-11%, but with a position like that, you should be able to make over 15%.

That's what you usually do with that kind of market position.

It is a supplier that is completely agnostic to electric, diesel, petrol.

All these cars have a crankshaft, so it is completely insensitive to the technical shift.

The problem we have now, and that we have disappointed the market, is that we have quite long contracts.

These contracts are structured in a deflationary environment.

You make a commitment to cut costs in these long contracts.

If you get inflation in such a contract, the revenues are fixed, but the costs go up.

I think that inflation has been on the rise for a year and a half.

Autoliv gets a well-deserved criticism from the industry that they should have acted earlier.

But you have to turn your contract structures against the customer so that they work in an inflationary environment.

Now they are built in a deflationary environment and then you get a strike.

When we talk logistics, in broad terms, the airline SAS is in the call and needs money.

It would be good to have a strong head of state.

We've just flashed that Stureplansgruppen, that is, Risch Sturehof, with several Stockholm sisters, will be listed on the stock market.

The founder of EQT made good money on listing listed risk capital companies.

When will Cvian come to the stock market?

No, I have been a CEO for Custos and I have been listed between 1995 and 2001.

I know what it is, and I think it's nice to have it.

We should talk about the biggest content, ABB.

What do you take from the Capital Market Days in Helsinki?

It's perfectly aligned with electrification, automation.

And you should pick up the electric charging business as well.

In the general industry, there are a number of nice opportunities to pick up the value in ABB that makes it be valued according to the available assets in the company.

If you compare it to other competitors, ABB is a

So, the underlying demand is absolutely right in time.

And then we have a company structure that is not fully appreciated by the market, but if you were to improve the structure, there is a big upside.

We live in a sweaty time in the stock market.

At the same time, we have a couple of fat years behind us that have attracted a lot of new people to the stock market.

In the US, we have had a GameStop hysteria.

Are you happy that so many people are interested in the stock market, or are you worried that people are making bad decisions?

No, but it's good that everyone is committed.

It's easy to lose ground contact when things are going well, when the stock market is doing well, and you lose focus on the flow of the company's cash.

You just think that this will increase even more for unknown reasons.

So I think that you should get on the stock market, but you should make sure that you don't get too greedy.

If you get too greedy, you get a bit stupid, and that's not good.

Christiane, it was great to have you here.


Speaker 0: I want to show a picture. You can have it, if you want to remember. This is a picture from a poll we did this morning. We asked everyone what they thought of the year 2022. In the middle, a large dose of optimists.

43% think we should go up from here. 15% think we should close the year at plus. And only 1% think we should wait for a hard melt. I was that percentage myself. But it feels like it's turning right now.

Many of our guests in DITV talk about that we have reached a bottom, and the stock market has, with the exception of today, still been looking up. I wonder what you think of the market temperature right now?

Speaker 1: I think that this situation is extremely difficult to predict. If the US increases aggression against China and China starts to isolate more and more, then it doesn't look fun at all. I don't think that scenario is likely. But I would say that as an investor, I think that it is 1 of the most difficult markets we have had in the last 30-40 years. It is difficult to see exactly what will happen, but if I look at the stock market from a scenario that I see as most likely, a large part of the stocks on the stock market, which I call the traditional, real companies that generate cash flow, that have existed for a long time and will continue to exist in the future.

They were actually quite cheap before the budget. And They are really cheap now. You can buy Ericsson for example for an enterprise value against an EBIT multiple of 516, if you look at

Speaker 0: 2023.

Speaker 1: It is extremely cheap. If you list up companies like Volvo, Trelleborg, SKF, Autoliv, etc. Those companies are also cheap in tougher macroeconomic scenarios. So I think we should start to clamp in now, I think. Then we've had a bubble.

We've been in a market where greed has massively overpowered fear for many, many years now. It's been an ultra-light monetary policy, and we have seen these hope companies grow like mushrooms in the ground. I was involved in investing during the previous big bubble, the IT and telecom bubble in

Speaker 0: 1998-2002-2001.

Speaker 1: The lesson there is that when the bubble is going, it is not going 55%, but

Speaker 0: 100%.

Speaker 1: I would say that we are halfway in terms of bubble emptying. A large part of the stock market will still go badly. I think that a large part of the stock market will be able to do well from here. And then the question, to answer this 1, what will land here? Will the stock market go up or down?

It's hard to say. I don't think there will be any major movements from this point on. But I think that 1 part of the stock market might be doing well during the rest of the year, but there are large parts of the stock market that you should be careful with and stay away from, because you will continue to lose money. I think that in general, you should look at the bubble price, Bitcoin is going down below

Speaker 0: 5, 000.

Speaker 1: The SPAC activity is going to stop, and it has already done that. It is a phenomenon that appears when you spend money and people become extremely greedy and speculative. I think Tesla shares are also a symbol for the bubble has gone down 50% from the top. I would say it must go down another 60 percent. It would be good to have a checklist of these 3 pieces.

If we have met them, we can almost blow the danger away. But it was an incredibly large bubble that had blown up, and it must be blown out completely. But We are quite active right now. We buy a lot and move our portfolio. We think that these situations are...

From a long-term investment perspective, these are excellent buying opportunities. You will look back in 5 years and say, oh my god, I bought Ericsson for EB multiple 5.

Speaker 0: Even if you buy a little too early, in 5 years we are...

Speaker 1: I think so. You will never know if it is a good deal in 1, 2 or 3 months, but in 5 years I can almost guarantee that it will be a great deal.

Speaker 0: It sounds like CWN has acted quite differently in 2022 compared to 2021.

Speaker 1: We have always invested in... The market has been in a kind of hope, hoping for profit in the future. You give the benefit of the doubt to the companies you are inflating. It's a kind of a fake market, and it shows up a bit every now and then. Our business has always been to invest in cash flows.

We did that in 2021 and

Speaker 0: 2022.

Speaker 1: But we have seen a big change in the market. Some companies in the portfolio are relatively cheaper or more expensive. So the activity to move around in the portfolio has been higher in 2022 compared to

Speaker 0: 2021. Something we are thinking a lot about is whether a possible cash-out or continued inflation pressure will affect the company's profits, even for the type of quality companies you mentioned, Swedish base industry. Are you worried that the PE figures, even if you use the diameter, will have to change because the profits will go down?

Speaker 1: The values, as I said, it's hard to judge how this will play out. But I think that if you look at inflation, interest rates, and so on, I think that we will see a certain decrease because of the inflation on the consumer side. But You should remember that a large part of the inflation problem is on the export side. The supply chain, logistics, delays after the pandemic and the demand has increased more than planned. As for COVID, the West has come out and China is still there.

China is an important supplier of many goods. I expect that the export side will be solved for large parts during the year. If you compare that to the demand side, there is a certain reduction. This means that inflation will come back. I think we can see the top inflation figures now.

I expect it will come back quite strongly during

Speaker 0: 2023.

Speaker 1: And I think the interest rates we see in the market today are probably the rates we will see in the future. I don't think there will be any big increases in interest. Of course, the Riksbank will increase its interest a bit, but if you look at what the market is pricing for interest, I think the market is reasonably correct in the levels that are out there right now.

Speaker 0: Very interesting. Unfortunately, the participants on the floor demand that we step back. The band has received several questions about Bitcoin. Why is the price of Bitcoin an important indicator of the bubble?

Speaker 1: Bitcoin is nothing. It's pure speculation. There is no underlying cause. There is no underlying cash flow. There is no underlying asset, no underlying cash flow.

I always ask about Bitcoin. Why is Bitcoin worth

Speaker 0: 500

Speaker 1: billion dollars? Why not

Speaker 0: 5?

Speaker 1: There is no 1 who can answer that question, because it is just speculation. Speculation lacks logic. And the reason why there is still some activity in Bitcoin is that it is still so-called decentralized finance, which means that it's free in front of the cloud. It won't be allowed to do business for much longer. When the rules come against Bitcoin, and you put the same rules as against the banking system to prevent cash laundering and money being moved back and forth, the market will die and thus the value will disappear.

Speaker 0: Is it so much more strange than paying 500 million for a Mondrian or a Picasso? As long as others think there is a value, there is, even if it is subjective.

Speaker 1: Yes, but I think in this case it is actually nothing. It's nothing you can hang on a wall.

Speaker 0: A digital wall, it must happen. Let's go to the opposite. You mentioned Volvo, among other industry companies. We have written about Cevian's interest in making a comeback in Volvo in today's industry. Can you tell us a little bit about that?

Speaker 1: Yes, it's a nice company. It hurts when we step down. Good timing, always quite low-value. And... Looking at the future prospects for Volvo, I think it looks exciting.

It has a couple of... The demand for the existing cars is very strong. The order book is full for the next 2 years. But it will continue to grow. You also have 2 technology companies that will drive the demand even more.

1 is that you can get in hydrogen and electricity in the engines, and that forces the customers... Most companies out there, when you look at their emissions, the big boom is logistic emissions. And you find a solution to replace diesel, the automakers will be forced to switch to that alternative, because all customers will demand that alternative. The next step in the development is autonomous driving. There is a huge lack of truck drivers all over the world.

Truck drivers are at 35% of the costs. I think this development will drive the government to release or enable self-driving cars much earlier than expected. And then, in the next technical shift, you will be forced to replace the entire park again. So, you have a strong underlying park demand, then you have electrification, hydrogen gas, and then self-driving cars. And this can hold a strong demand for companies like Volvo for the next

Speaker 0: 15

Speaker 1: years. Today, they buy on EBIT multiple of 8 next year. 7 or 8.

Speaker 0: Very cheap. It sounds like you've already thought about Volvo.

Speaker 1: I always think Volvo is cheap. It's always been cheap. The challenge for the company is to work out the value. There are some companies that are always cheap. But I think if you can get it out, and if what I'm saying is true, there should be a case here that is real growth, not IT-hoping growth, which doesn't usually exist in the end.

This can be real growth that gives real cash flow.

Speaker 0: Speaking of expectations, you mentioned Tesla as a bubble indicator. Tesla is well ahead in self-driving cars.

Speaker 1: Tesla is a great company, but it's too expensive. All-stars, they will have a strong position in the future, but the car industry is a tough industry. And if you look at electric cars compared to combustion engines, there are several actors in electric cars. There was a hard competition, hard margins over here. There will be more competition, tougher margins over here.

So There is no reason to change the value so much over time. In the past, the car market was extremely low-value. Now Tesla is extremely high-value. I'm sure that it will be drawn into a more normal car market in a short time.

Speaker 0: Can you give a short reasoning on the other Volvo? We have 2 companies with the same name on the stock market. Is Volvo less interesting because of the European market?

Speaker 1: I think it's more of a consumer business, where the consumer is more price sensitive. And there is a lot of tough competition. Because the trucks are a well-structured industry globally. There aren't that many competitors. It's quite structured in North America, South America and Europe.

So I think the market discipline is much better there. Carriages are a tougher industry and it is also more connected.

Speaker 0: Autoliv doesn't have a content, can we say, regarding vehicles. Maybe it hasn't developed as well as we could wish. Can you give us a short update?

Speaker 1: Autoliv is a fantastic company.

Speaker 0: 50%

Speaker 1: of the world market share in crotch hoods. The next competitor is at

Speaker 0: 15%, and

Speaker 1: you start to make a lot of money. We haven't done that. You make a decent 10-11%, but with a position like that, you should be able to make over 15%. That's what you usually do with that kind of market position. It is a supplier that is completely agnostic to electric, diesel, petrol.

All these cars have a crankshaft, so it is completely insensitive to the technical shift. The problem we have now, and that we have disappointed the market, is that we have quite long contracts. These contracts are structured in a deflationary environment. You make a commitment to cut costs in these long contracts. If you get inflation in such a contract, the revenues are fixed, but the costs go up.

I think that inflation has been on the rise for a year and a half. Autoliv gets a well-deserved criticism from the industry that they should have acted earlier. And they should have done that as well. But you have to turn your contract structures against the customer so that they work in an inflationary environment. Now they are built in a deflationary environment and then you get a strike.

Speaker 0: When we talk logistics, in broad terms, the airline SAS is in the call and needs money. Is that something you are keen on?

Speaker 1: What do you think?

Speaker 0: It would be good to have a strong head of state.

Speaker 1: It might be good, but not so fun.

Speaker 0: I'll move on. We've just flashed that Stureplansgruppen, that is, Risch Sturehof, with several Stockholm sisters, will be listed on the stock market. Something that makes you drool?

Speaker 1: It might be fun, but not so good.

Speaker 0: The founder of EQT made good money on listing listed risk capital companies. When will Cvian come to the stock market?

Speaker 1: We will come after the summer.

Speaker 0: Have you ever been an alternative?

Speaker 1: No, I have been a CEO for Custos and I have been listed between 1995 and 2001. I know what it is, and I think it's nice to have it.

Speaker 0: Someone here is upset. They think we talk too much about Volvo. We should talk about the biggest content, ABB. Have you bought more there? What do you take from the Capital Market Days in Helsinki?

Speaker 1: ABB is 1 of our biggest content. And... It's perfectly aligned with electrification, automation. The product palette is fantastic. And you should pick up the electric charging business as well.

It is a nice underlying growth in it. It should be like its own company. In the general industry, there are a number of nice opportunities to pick up the value in ABB that makes it be valued according to the available assets in the company. If you compare it to other competitors, ABB is a

Speaker 0: 40-50%

Speaker 1: discount. The underlying demand is right on time. 40-50%. So, the underlying demand is absolutely right in time. And then we have a company structure that is not fully appreciated by the market, but if you were to improve the structure, there is a big upside.

Speaker 0: We live in a sweaty time in the stock market. At the same time, we have a couple of fat years behind us that have attracted a lot of new people to the stock market. In the US, we have had a GameStop hysteria. Are you happy that so many people are interested in the stock market, or are you worried that people are making bad decisions?

Speaker 1: No, but it's good that everyone is committed. I think private ownership is a target. Private ownership is a target. And it's a dangerous market to be in. It's easy to lose ground contact when things are going well, when the stock market is doing well, and you lose focus on the flow of the company's cash.

You just think that this will increase even more for unknown reasons. So I think that you should get on the stock market, but you should make sure that you don't get too greedy. If you get too greedy, you get a bit stupid, and that's not good.

Speaker 0: Don't get too greedy, or too stupid. That's the final word. Christiane, it was great to have you here. Thank you very much. Guilty.

I reply can't get that yet. Roligt att du var här. Stort tack!

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Finansnestorn Christer Gardell: "Bubblan måste blåsas ut helt"