Embrace Imperfection, Drive Innovation: A Fresh Perspective on Investment Resilience
Navigating Investment Challenges: A Personal and Operational View
Engaging in the world of investment is an intricate dance, demanding a blend of sharp competitive drive, exceptional memory, and the calm resilience of a seasoned monk. While achieving all three simultaneously is rare, continuous effort is essential. The demanding nature of this profession means every data point, decision, and timing is critical, leaving no room for excuses in performance reports. This environment necessitates relentless effort.
The Power of Self-Compassion in High-Stakes Investing
Sustaining this intense effort over time requires a unique form of self-kindness, not in a superficial sense, but as a critical operational principle. The inability to forgive oneself for errors can lead to either complete risk aversion or, more detrimentally, making poor decisions for the wrong reasons\u2014both fatal flaws for a fund manager. At Protean, we address this by resetting our portfolio at the close of each month, disregarding past performance figures. This fresh start, every month, empowers us to move forward, learn from our missteps, and avoid being trapped by past outcomes, echoing the wisdom of industry veterans.
Beyond the Obvious: Distinguishing Investment Errors
Errors in investing are inevitable, but their nature varies significantly. There are predictable mistakes, often born from overconfidence or a lack of thorough analysis, which are recognizable in hindsight. These are the \u201cshould have known better\u201d scenarios. Then there are original errors\u2014unforeseen and spectacular\u2014which, though costly, signify independent thought. The goal is to make mistakes that cost minimally rather than jeopardizing an entire career.
AI's Role and Limitations in Forecasting Market Dynamics
Artificial intelligence excels at summarizing past events and historical data, providing polished explanations of previous misjudgments. However, it struggles with predicting market discontinuities\u2014regulatory changes, behavioral shifts, or unforeseen global events. These are the moments when markets truly move, and AI's reliance on historical distributions limits its foresight. Over-reliance on AI for decision-making risks leading to conventional mistakes, albeit with superior articulation. Maintaining human judgment, even if it means occasional original errors, is crucial for navigating unpredictable market shifts.
Cultivating Resilience: The Operational Maintenance of an Investor
The true artistry lies in constructing an investment framework that accommodates error without letting it proliferate. This means truly resetting monthly, ensuring that past emotional baggage doesn't cloud future decisions. Self-kindness in this context is not an indulgence but a vital operational practice. A portfolio manager constantly burdened by past failures becomes distracted rather than disciplined. The strategy involves making decisive moves, taking calculated risks when the reward is disproportionately high, and swiftly exiting losing positions. This approach fosters continuous learning, preserves flexibility, and ensures clear thinking, allowing for the compounding of sound decisions over the long term.
The Nuance of Thematic Investing: Beyond the Narrative
The scrutiny of thematic funds is understandable, given their tendency to thrive during periods of strong narratives and then decline as new trends emerge. This is not necessarily mismanagement but an inherent aspect of their business model. A theme becomes marketable once its underlying trend is so evident that re-evaluation has already occurred. By the time a fund is established, the opportunities it represents may be mature rather than emerging. When market sentiment shifts, these funds are often constrained by their thematic mandates, even if the world has moved on. Critiquing such a fund for underperforming after its narrative peaks is predictable, akin to a mosquito's inherent behavior.
Protean's Adaptive Approach to Market Trends
Protean Funds adopts an opposing strategy. Themes serve as inputs, not rigid directives. When a trend presents an opportunity, we engage, whether through long or short positions. Conversely, we disengage when the trend matures or breaks. Our value proposition is adaptability, not selling an uncertain future in a fund format. This flexibility enables us to respond to market shifts without being confined by a label, ensuring that our portfolio is constructed for returns rather than marketing. While this approach may not generate the extreme returns of a perfectly timed thematic play, it aims to avoid the associated downturns.
Leveraging Market Pessimism: Identifying Hidden Opportunities
The current intense criticism of thematic funds has piqued our interest. Instead of joining the outcry, we approach this with humility and curiosity. Significant underperformance, widespread redemptions, and a pervasive sense of pessimism often create market distortions, which, by their very nature, eventually lead to opportunities. When companies are judged on short-term performance, and innovative tech companies are penalized for minor setbacks or unfashionable labels, selling pressure can become self-reinforcing. This, combined with forced outflows from thematic funds, can cause entire market segments to trade as if the long term no longer matters. Such conditions are ripe for astute stock picking, as indiscriminate selling often overlooks truly valuable assets amidst the overhyped.
Fostering Future Talent: Introducing Protean Prot\u00e9g\u00e9
Protean Prot\u00e9g\u00e9 is a new six-month rotational program designed for individuals who are exceptionally curious, analytical, and possess an innate passion for investing. We are currently accepting applications for the inaugural cohort, set to begin in early 2026. The program's core idea is to have the entire Protean team mentor, challenge, and develop one outstanding talent at a time. In return, we expect a strong work ethic, intellectual integrity, and an almost obsessive enthusiasm for equities.
The Scope of the Protean Prot\u00e9g\u00e9 Experience
Success in this program is measured by actual returns and tangible contributions. Participants will engage in diverse tasks essential for making informed decisions and ensuring smooth operations. This includes conducting in-depth research, participating in field visits and company meetings, developing and refining financial models, managing critical databases, and creating presentations. As a compact, disciplined team, every member's contribution is valued, and no task is considered insignificant.
Benefits of the Protean Prot\u00e9g\u00e9 Program
Participants will gain unparalleled exposure to real-time decision-making and the comprehensive investment process. They will experience firsthand how a dedicated fund company operates, leaving with enhanced judgment, a valuable professional network, and practical experience. This program is ideal for individuals currently pursuing higher education who are driven by an intense fascination with investing. If your friends find your passion for markets unusual, you'll find kindred spirits here.
Program Logistics and Application Process
The Protean Prot\u00e9g\u00e9 program is a full-time, six-month rotational position based in our Stockholm office, commencing in early 2026. Compensation will be competitive for an internship of this caliber. If this opportunity resonates with your aspirations, we encourage you to apply. Applications, consisting of a CV and a concise cover letter, should be sent to info@proteanfunds.com. The deadline for this round of applications is December 10.
Protean Small Cap: Performance and Portfolio Adjustments in November
In November, Protean Small Cap recorded a return of -2.3%, trailing its benchmark, CSRXN (SEK), by 1.3 percentage points, which saw a 1.0% decline. Year-to-date, the fund has achieved a 15.3% return, surpassing its benchmark by 9.6 percentage points. Since its inception in June 2023, the fund has grown by 60.3%, outpacing the Carnegie Nordic Small Cap Index by 36.5 percentage points. The fund currently manages approximately SEK 780 million. Notable winners for the month included Acast, which climbed over 30%, and Storskogen, a Swedish acquirer whose debt levels have stabilized, suggesting a favorable risk/reward outlook. Kambi also became a significant contributor after the fund initiated a position following an anticipated post-earnings dip and a contract extension with Penn Entertainment. Conversely, Bavarian Nordic was the largest detractor, experiencing a 17% drop after a failed bid, prompting the fund to increase its position due to strengthening fundamentals. Other underperformers included Sinch, Devyser, and Smartoptics. The fund also divested from Arjo, Humana, and Coor, citing a lack of earnings momentum, diminished valuation appeal, and normalized valuations, respectively. Storytel became a top ten holding, capitalizing on perceived overreactions to Spotify's entry into the Nordic audiobook market. Additionally, BTS was added after a significant share price decline, viewed as a temporary setback for a historically successful global consultant. Camurus was also integrated into the portfolio, with its core business being cash-flow positive and its pipeline's potential undervalued by the market. The portfolio remains diversified with 50 positions.
Protean Select: November Returns and Strategic Moves
Protean Select recorded a -1% return in November, bringing its year-to-date return to 8.8%, maintaining volatility below 6%. The primary contributors to its performance were Acast, Rusta, and Volvo, while Bavarian Nordic, Devyser, and Nibe were detractors. The fund's average beta-adjusted net exposure for November was 35%, with a gross exposure of 128% (adjusted for cash management). November was an exceptionally active month, marked by the failed bid for Bavarian Nordic, which cost the fund -0.5%. Despite the setback, the fund would make the same decision given the circumstances. Concerns voiced about AI in online classifieds, particularly through a short position in VEND, were echoed by several research houses, leading to a significant sentiment shift and a reduction in negative exposure. The fund also shifted its stance on Volvo AB, covering its short position and initiating a long one due to regulatory clarifications, an undervalued stock, and reduced estimate risk. Similar to the Small Cap fund, Protean Select added Storytel, exited Arjo, and divested from Coor.
Camurus: A Deep Dive into an Undervalued Biotech Opportunity
Camurus has recently become a significant holding, not for competing with specialist biotech funds, but due to a widening disparity between the company's true value and market perception. Its FluidCrystal injectable depot technology, despite initial wariness, has consistently performed across various applications, showing promise in dose flexibility and tolerability. While the pipeline, including CAM2029, an addiction portfolio, and Semaglutide data, is extensive but not without challenges, the Lilly partnership provides credibility. Investors' skepticism regarding GEP-NET's delayed event accumulation is noted, but the fund views market weariness as a potential mispricing. The solid foundation provided by Buvidal/Brixadi's success in the buprenorphine market, coupled with a strong balance sheet and an experienced CEO, makes Camurus attractive. Its current valuation, at mid-teens EBIT multiples with substantial net cash, undervalues its potential beyond Buvidal. The risk/reward profile is compelling not because the story is perfect, but because pipeline optionality is effectively free. Although catalysts are distant and early investors may exit, the core business offers protection, and potential upside far outweighs current valuation. The fund views this as a setup where the reliable business is acquired, and future growth opportunities come at no additional cost.
Protean Aktiesparfond Norden: Long-Term Growth and Investor Transparency
Aktiesparfonden, a Nordic long-only fund, aims to deliver above-market returns over the long term through active investment in value-creating companies, offering a low fee structure that decreases as the fund expands, sharing the benefits of scale with investors. Since its launch eight months ago, Aktiesparfonden has generated a 17.7% return, significantly outperforming the VINX Nordic Cap index's 7.5% gain during the same period. The fund now manages over SEK 1.4 billion. Communication for Aktiesparfonden is currently provided in Swedish, with updates available on www.aktiesparfonden.se under the "Anslagstavla" section. We appreciate your long-term vision and confidence in our methodology.
Protean Funds: Core Investment Principles
We prioritize performance above all else, not convenience, fund size, or marketing. Withdrawals from our funds are quarterly, with the Small Cap fund allowing monthly withdrawals. We maintain a high level of discretion regarding our specific holdings. Our strategy is inherently flexible and adaptable, making it difficult to categorize. It's important to note that a hedge fund can incur losses even in a rising market. We implement a performance fee based on successful outcomes, and larger investments do not receive a fee discount. While our track record is still developing, we are committed to demonstrating strong, consistent performance.
Aktiesparfonden: Guiding Principles for Investors
Our goal is to achieve above-index returns over a three-to-five-year horizon, though no guarantees can be made. Although the fund is traded daily, frequent trading is not encouraged. Outperforming the index necessitates taking positions that deviate from the norm, which can sometimes be challenging. Investors should be aware that the fund may underperform the index for extended periods. As the fund's assets under management grow, our fees will decrease, with the first 10-basis-point reduction occurring upon reaching SEK 10 billion in AUM. Thank you for your continued trust and investment.