Idea note
This is an Idea note; It’s a collection of early signals – companies mentioned in fund letters, blogs, or by sharp investors online. Not a full pitch, just a starting point for ideas that might be worth a more in-depth look.
Time to Disconnect - Peak Valuation Meets Slowing Growth
Idea source: Kavaljer
Price 58 SEK
Bahnhof AB - Swedish provider of internet, broadband and telecom services with focus on security and high-speed connections.
Ticker: BAHNB | Timeframe: 12-24 months | 📉 Bearish
Kavaljer finds that Bahnhof, despite being a historically fantastic contributor to fund returns, now faces significant headwinds that justify exiting the position. The fund managers observe that growth has shifted from exponential to linear and has been notably decelerating in real terms recently, while profitability appears to have peaked. They believe future margin expansion is limited due to network owner dynamics, with Bahnhof’s reliance on public network providers unlikely to sustain its historical advantage as growth shifts to areas with lower profitability potential.
Setup: Despite consistent market outperformance historically, Bahnhof now trades at all-time high EV/EBITDA multiples while showing the lowest profit growth rate in its history.
Latest development: Company is pursuing ambitious international expansion into Denmark, Norway, Finland and Germany, introducing significant execution risk.
Reason for mispricing: Market continues to value Bahnhof on historical growth metrics despite evidence of deceleration.
Timing: Expansion costs beginning to pressure margins (Q1 2025: 13.2% operating margin vs 13.9% year prior).
Value catalysts: Negative - potential margin compression from international expansion costs and shift to private network operators.
Valuation: Trading at +17x EV/EBITDA LTM, significantly above historical averages.
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