Stockholm (HedgeNordic) – The Nordic hedge fund universe welcomed a new player from Norway in 2023 with the emergence of TIND Asset Management. Spearheaded by Christer Bjørndal as CEO, former founder and responsible portfolio manager at another Norwegian hedge fund player, this venture brought together a team of former colleagues from Norges Bank Investment Management (NBIM), Norway’s Oil Fund. TIND is a single-product manager running a long-biased equity hedge fund specializing in small- and mid-cap stocks. The portfolio is managed by Harald Hjorthen (CIO) and Jon Håkon Findreng (Portfolio Manager).

“We are a team that met at or through the sovereign wealth fund of Norway,” says Christer Bjørndal, who departed from the Oslo-based fund boutique he co-founded to establish TIND Asset Management. “Harald Hjorthen, Jon Håkon Findreng and I all worked in the same team at NBIM,” he continues. The founding team was joined by Knut Kjær, the inaugural CEO of NBIM, as Partner and Chairman and Øyvind Schanke, former CIO at NBIM, as an independent board member. Even Erik Haukaa, a Partner overseeing Investor Relations, first crossed paths with Christer Bjørndal through NBIM, while Haukaa was employed at East Capital and Bjørndal was responsible, among other duties, for European equity mandates.

Since 2016, Christer Bjørndal and Harald Hjorthen have been independently investing in Nordic equities “in parallel systems,” with Bjørndal running one, and later two funds at CARN Capital, while Hjorthen managed his capital through his family office. Following Bjørndal’s departure from CARN Capital, “the stars aligned” for the establishment of TIND Asset Management in early 2023 and the subsequent launch of TIND Discovery Fund in late 2023. Having spent years evaluating niche asset managers across the globe, the TIND team seeks to apply lessons learned from this experience to their operation in the Nordics. One crucial aspect is the alignment of interests with investors. Hence, the partners at TIND have invested more than $30 million in the fund, under the same terms and conditions as all the external investors.

Discover the TIND Philosophy

Launched in November 2023, the TIND Discovery Fund employs bottom-up fundamental research to build and manage a long-biased, high-conviction and concentrated portfolio of investments in small- and mid-cap Nordic stocks. “When setting up the firm and deliberating on the strategy, consensus was quickly reached because we had been managing capital in the same way through our different structures,” explains Bjørndal. “It’s really about understanding what we own. As fundamental analysts doing our own research, we adopt a highly concentrated approach within a niche market where we believe we can add substantial value or alpha, which for us is the Nordic small- and mid-cap segment,” he explains. Bjørndal further emphasizes that the investment approach and portfolio behind the TIND Discovery Fund are led by Harald Hjorthen as chief investment officer, with Jon Håkon Findreng serving as co-pilot. As such, the TIND Discovery Fund constitutes a continuation of the investment strategy of Hjorthen’s family office, with an annualized net return of 20.5 percent since its inception in 2016 (NOK, net of TIND’s fee schedule, as of April 2024).

“It’s really about understanding what we own. As fundamental analysts doing our own research, we adopt a highly concentrated approach within a niche market where we believe we can add substantial value or alpha, which for us is the Nordic small- and mid-cap segment.”

Christer Bjørndal

Typically maintaining a net exposure in the range of 80 percent to 100 percent, the fund concentrates the majority of its risk in 15 to 20 positions, with the flexibility to take individual alpha-driven short positions. When seeking both long and short positions, the investment team prioritizes “non-consensus opportunities,” as highlighted by Bjørndal. “Over time, it’s difficult or even impossible to generate alpha if we share the same view as the market, so we build conviction through differentiated views based on unique insights,” he explains. “This aligns with our vision of creating value for our investors by being specialists and having niche knowledge within the Nordic equity space.”

“At TIND, if we don’t have good short ideas that we have conviction in, we don’t short. End of story.”

Erik Haukaa

Erik Haukaa, responsible for Investor Relations at TIND Asset Management, emphasizes that “our approach is entirely conviction-driven, both on the long side and short side.” This conviction-driven approach extends to the short book, which serves as a source of returns and alpha rather than a risk management tool. “Short positions are not primarily used as risk management overlays or hedges against certain factors or existing long positions,” explains Haukaa. TIND Discovery Fund does not adhere to a specific target net exposure because doing so often results in “reverse engineering the net exposure and shorting without necessarily having conviction in these positions,” according to Haukaa. “At TIND, if we don’t have good short ideas that we have conviction in, we don’t short. End of story.”

Common Denominators: Value and Resiliency

Most, if not all, of TIND Discovery Fund’s long positions share two fundamental attributes: value and resiliency. “Our investment approach is deeply rooted in understanding the intrinsic value of companies,” explains Bjørndal. However, this does not imply that the fund’s portfolio exclusively consists of stocks with low price-to-earnings multiples. “We have both companies with low PE ratios and other higher-growing businesses that don’t necessarily screen cheap by traditional valuation indicators,” he elaborates. “While our portfolio comprises a mix of both low and higher valuation stocks, the common denominator for all of them is that we require an annual return of 15 percent over five years from each investment.”

“While our portfolio comprises a mix of both low and higher valuation stocks, the common denominator for all of them is that we require an annual return of 15 percent over five years from each investment.”

Christer Bjørndal

Another common denominator guiding TIND Discovery Fund’s investment choices is resiliency. “Resiliency is a key word in our stock selection process,” notes Haukaa. “We prioritize companies with inherent downside protection in their business models, ensuring their ability to weather market cycles and emerge in good shape from the turbulence that inevitably occurs,” he elaborates. Haukaa emphasizes the importance of idiosyncratic investment cases, steering clear of positions heavily influenced by macroeconomic factors such as oil prices or interest rates. “These are exogenous factors that we don’t have an edge in analyzing.”

“Valuation discipline is crucial for us as it provides a starting point in evaluating the risk-return profile of each investment case.”

Erik Haukaa

Overall, the fund’s investment team is primarily seeking resilient business models trading at appealing valuations. “Valuation discipline is crucial for us as it provides a starting point in evaluating the risk-return profile of each investment case,” says Haukaa. “If valuations are high, by definition, you are looking at more downside potential.”

Concentration

Another defining characteristic of TIND Discovery Fund’s investment strategy is its focused portfolio. “Taking concentrated bets is better for returns, as research indicates that tail positions often underperform,” explains Bjørndal. “Although concentrated portfolios imply higher risk, over time, there’s no doubt that a concentrated portfolio has the potential to perform better, given sound stock selection and prudent risk management in terms of diversifying drivers of risk and return.”

“Although concentrated portfolios imply higher risk, over time, there’s no doubt that a concentrated portfolio has the potential to perform better, given sound stock selection and prudent risk management in terms of diversifying drivers of risk and return.”

Christer Bjørndal

“We are fundamental, bottom-up-driven analysts. Therefore, the most logical approach to risk management for our strategy is not top-down, but bottom-up. We understand what we own,” emphasizes Haukaa. “Considering the ever-changing contexts that businesses operate in, you cannot do that if you are managing a portfolio of 50 or more positions,” he elaborates. For our concentrated portfolio, diversification should not be achieved through the number of holdings but through understanding the underlying drivers of risk and return for each business model, notes Haukaa. Therefore, “as conviction-based investors, our portfolio construction aims to reflect our views in real-time.” This conviction has paid off so far, with TIND Discovery Fund gaining 30.5 percent since launching in November 2023 through the end of April.