Welcome to Nordic Investment Partners

About Nordic Investment Partners

Nordic Investment Partners was founded in 2017 by Ole Søeberg. Ole has a broad and long experience in global equity markets since early 1980's. He has been in investment banking, Investor Relations in large corporates and Asset Management and in various leadership roles.

Nordic Investment Partners functions as a family office. However, being a long term investor there's time for other activities such as;

Advisory, research and consultancy is provided within

Investment inspiration and education for investment funds and family offices. Focus on wealth preservation and growth using GARP and deep due diligence. External roadmaps are provided free on a quarterly basis. You may ask why to provide work that takes hours to make away for free. Well, they serve many purposes and over the years they have worked quite well and also stimulated my passion and curiousity around the investmentment world.

Introducer for Brock Milton Capital Link

Global long only, concentrated portfolio of 30-35 companies. High quality 'champions' and a smaller section of 'special situations'. Growth without overpaying. BMC Global just turned 10 years old. Among 1% best global long only funds

Since inception in 2014 the fund has returned 15% per year (in SEK) and 3% better than MSCI World. The fund's founder Andreas Brock has made this book for better insight in the investment thinking

Nordic Value investment learning and inspiration 'not-for-profit' conference for experienced equity investors. Check the Nordic Value tab for more

Contributor and/or speaker at Børsen All-Star team, Cyprus Value, ValuEspana, ValuX, Miilionærklubben, MOI Global and SumZero and other. Investor idea sharing and always good education and inspiration

Reach out if you're interested knowing more.

You can reach me on ole.soeberg@nordic-investment-partners.com or via the contact box

On this website you find

Investment roadmaps and quarterly updates for inspiration and education only

Nordic Value Conference - a conference for investment entusiast sharing investment ideas. More on Nordic Value section on this site

Pitches and illustration for investment proces for a single company

Roadmap 2024 - 3Q24 update. Huge inheritage handover the next 20 years

Roadmap 2024 - 2Q24 update. - what will it take to get S&P500 to 10.000?

Roadmap 2024 - the post-covid inflation clouds vaporize day by day

Monthly observation

Bubble Meter Signals Frothiness in Certain Areas: Is Big Brother’s Passive Money at Play?

13 December 2024

As the year draws to a close, I revisit my simple yet effective method for gauging the stock market’s bullishness and bearishness: counting how many large companies are trading at more than 10x forward sales.

Global stock markets have risen by an impressive 27% in 2024 (measured in euros), largely driven by US equities, with additional support from a 5% stronger US dollar. US corporate earnings grew by 10% this year, while European earnings remained flat. As a result, higher valuations in the US have been the main driver of the performance gap between the two markets.

What’s Behind Higher Valuations?

Typically, higher valuations reflect expectations of stronger future earnings or lower interest rates. In 2024, these factors are bolstered by enthusiasm around artificial intelligence (AI) and hopes for a dovish pivot in monetary policy. But there’s another significant development: the rise of passive investing. For the first time, capital in passive index funds ($16 trillion) has surpassed that in active funds ($14 trillion).

To put this in context, the global tradeable equity universe stands at $68 trillion. Retail investors, sovereign wealth funds, founders, and other active investors collectively hold the remaining $38 trillion. Despite this, the growing dominance of passive funds—driven by index providers rather than company fundamentals—has undeniable influence over market dynamics.

2024 Bubble Meter: Nvidia Reigns Supreme

This year’s bubble meter is crowned by Nvidia, which boasts a market capitalization of $3.36 trillion and trades at a lofty 26x forward sales. Other ultra-large-cap companies trading above the 10x forward sales threshold include Microsoft, Tesla, Broadcom, Eli Lilly, Novo Nordisk, and Netflix.

One standout case is Palantir, which has been the S&P 500’s top performer of 2024. After joining the index in September, it surged by 325% for the year, buoyed by passive fund inflows that follow the dictates of "Big Brother" index providers, irrespective of valuation or fundamentals.

Palantir: A Case Study in Growth Expectations

Palantir’s meteoric rise has left it with a market cap of $167 billion, despite expected 2025 revenues of just $3.5 billion—implying a valuation of 48x forward sales. This prompts an intriguing question: how much growth is required to justify such a premium valuation?

If Palantir achieves an extraordinary 40% annual revenue growth over the next 20 years—a feat no large company has ever sustained—it would generate $3 trillion in annual revenues by 2044. Assuming a 35% free cash flow margin and a valuation multiple of 25x forward earnings, Palantir could have a market cap of $25 trillion. That’s a compounded annual growth rate (CAGR) of 28%—an exceptional outcome that would comfortably beat market returns.

However, even at 20% annual revenue growth—a world-class rate—Palantir's 2044 revenues would reach $135 billion. With the same free cash flow and valuation assumptions, this would yield a market cap of $1.1 trillion, delivering a respectable 10% annual return over 20 years.

The risks are clear: if Palantir’s growth trajectory falters, the downside could be significant. As we’ve seen with Tesla and Beyond Meat, strong fundamentals and sustained growth are essential for maintaining high valuations.

No Alarm Bells—Yet

My 2024 roadmap remains a work in progress, and while signs of frothiness are evident in some areas, the overall market sentiment does not yet warrant alarm.