Great result, I won’t comment on it any further, but will instead share some longer-term thoughts.
Lately, I’ve been reflecting a lot on why Röko would be a better investment than the dozens, if not hundreds, of listed serial acquirers operating on an ostensibly similar decentralized model.
These reflections have culminated in a few key points:
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Incentives. This is what I like most about Röko. Incentives at both the headquarters and subsidiary levels are tied to pure ownership, which in my view is the only right way for a serial acquirer. Every member of Röko’s core capital allocation team (Karlsson, Billing, Bladh, and Nordby) owns a substantial amount of shares.
The future development of each of their personal wealth is therefore largely dependent on how Röko creates value over the coming decades. Only genuine ownership truly drives someone to balance risk and return, avoid total loss of capital, and work with passion and a long-term perspective.
In the beginning, Röko admittedly grew rapidly by reaching into the owners’ pockets, but for a while now we’ve been in a phase where growth is funded solely by reinvesting cash flows alongside moderate leverage, while keeping the share count constant.
This also makes sense from an incentive perspective: why dilute your own ownership if you are building something durable that will compound significantly in value over the coming decades? If Buffett regrets anything, it’s using his own stock as currency in acquisitions.
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Track record and achievements. Röko’s founders, Karlsson (former CEO of Lifco) and Billing (former CEO of Nordstjernan), possess indisputable long-term track records of highly effective capital allocation, value creation, and leading decentralized organizations.
The younger cohort (Bladh and Nordby) doesn’t have an equivalent track record yet, but in a few years, we will already be able to speak of a 10-year track record for them at Röko. Leading a decentralized organization and building its culture is very difficult in practice, so knowing how to do it is invaluable.
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Industry agnosticism. For this point to be considered an advantage, the previous two points must hold true. In my view, being industry agnostic allows Röko to genuinely find quality companies and the right entrepreneurs.
This allows potential investments to truly be evaluated on a risk/reward basis, regardless of where or in what sector they operate. Capital is simply allocated wherever it makes sense, independent of other factors. If a serial acquirer focuses on only one industry or geography, its opportunities are far more limited. Of course, industry agnosticism requires a highly versatile, skilled, and experienced team—which I believe Röko has.
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Small size. Even if the previous three points hold true, Röko might not be as compelling of an investment if it were, say, 10–15x larger than it is today. At that scale, under the current playbook, value creation would already be slower, and the current team would likely find it impossible to reinvest cash flows at attractive returns into small and medium-sized enterprises.
Value wouldn’t necessarily be destroyed even then, but value creation would be noticeably slower as the law of large numbers kicks in. At its current size and with its current playbook, the company has room to multiply several times over without bottlenecks, as it is not constrained by commitments to a specific industry or region.
Additionally, I think the company reports very clearly and transparently on the things that matter. The accounting makes sense; for example, liabilities related to minority interests are recognized on the balance sheet at fair value, which, among other things, makes valuation easier for investors.
And finally, of course, a big disclaimer that I own shares, so I am biased in my opinion! It would therefore be constructive to turn the discussion toward considering why Röko might be an inferior investment compared to other serial acquirers 