In the early 1970s, the Swedish capital and stock markets were underdeveloped, characterized by heavy regulation, a “club type” environment, and low transparency. Exchange rate regulations meant there was no international capital in the market, which in turn led to low liquidity and low valuations compared to other European equity markets. When comparing a Swedish company to a German equivalent, the valuation multiples were sometimes 3-4 times higher on the continent in relative terms.

Transparency was also low. Reports were hard to find, and if you found them they were often hard to interpret, incomplete, and meant to misinform rather than enlighten the reader. There was little independent analysis and there was no requirement for group accounting. Accordingly, few people bothered to read them thoroughly, which meant that with careful analysis, one could uncover substantial mis-pricing and unveil a lot of value. In contrast to today’s market environment, wherein all information is available in real time and robot traders place their servers as physically close to the stock exchange as possible to get a minimal advantage, this was an environment where fundamental analysis could lead to tangible investment ideas and superior returns.

On the industrial side, the Swedish capital market was built on a few global companies that had come out of a resource-rich economy and had world-class engineering skills, such as SKF, Skånska Cement, Alfa Laval and Ericsson– most of them led by engineers. A small group of owner-families and managers held key positions and all of the information. Cross holdings created interdependence within and between industry groups. This was not an efficient market in terms of capital allocation, or in terms of governance.

It was in this environment that Robert Weil, with his company Weil Invest, started attracting clients to whom he provided investment advice and money management. He saw the opportunity and combined an interest in the surrounding society with an understanding of the capital market, and an independent analytical mindset when developing investment ideas. He did so at a time when young people all over the globe protested against old, hierarchal structures and capitalist ideas.

In the following decade, Robert Weil built a sizable group of clients and an increasing amount of capital with Weil Invest. Time was spent analyzing companies, forming investment ideas, and working closely with key clients to build significant ownership in major Swedish companies. This was detective work. Since there was no requirement for group accounting, controlling owners and managers who had no interest in showing the full picture could keep significant assets out of the public eye. The major companies were run by engineers who had limited interest and understanding for the financial aspects of the business, and when Robert Weil met management teams and asked detailed financial questions, he formed close relationships with controllers and finance directors who were not used to being at the center of attention. These financial questions were not normally asked–not even internally–by top management or their boards.

Over time, these interactions led to significant knowledge of these companies and helped form deep relationships, which in turn led to investment opportunities such as the discovery of unknown non-core assets abroad. (These on their own could motivate the share price of a large company!)

Over time, Robert Weil came to represent a new establishment with a strong financial and analytical mindset, which challenged old owner-families and obsolete ideas about capital, ownership, structure and industrial development. During the 1970s, Robert continued to question established structures based on independent analysis, and also used his shareholdings to influence–directly and indirectly–Swedish and international industry. In this way, Weil Invest was actively involved in large structural and ownership changes in Swedish industry such as the merger of Beijerinvest and Pribo, as well as the restructuring of Cementa and the formation of Euroc.

It was this first phase in the company’s history that laid the foundation for Proventus’ culture and investment philosophy. This philosophy lives on today, and is centered on building investments using thorough fundamental analyses, having a truly contrarian mindset, being relationship driven, and acting independently with long-term perspective.