We recently came back from a trip to Sweden where we met Nordic companies across various sectors. The Nordic region remains an attractive hunting ground for us as it combines high digital adoption and policy stability with operator-led cultures and disciplined capital allocation. Here are the key highlights we are acting on.

 

What we heard in the rooms: quality of earnings is beating the cycle

The mood at last week’s Nordic investor meetings we attended was pragmatic, not euphoric, but under the surface we saw a pattern: businesses with recurring, indexed, and locally delivered revenues are more optimistic than those with a larger exposure to cyclical factors and US demand. Inventory headwinds are easing in parts of industrial tech, while public and energy-related demand is holding up, and capital allocation remains disciplined where culture and decentralization are real.

 

Demand & activity: where growth is actually showing up

Recurring software and service subscriptions continue to grind higher, helped by contractual indexation and low churn. The discretionary “last couple of points” of spend has cooled, but core retention and pricing kept the flywheel turning. In industrial/electronics supply chains, order intake is finally running ahead of shipments for some vendors, a typical behavior as inventory corrections bottom. Decentralized “compounders” continue to see a very large pipeline of acquisition candidates while still experiencing positive organic growth. Public infrastructure, grid and electrification projects remain the clearest multi-year demand lanes, and defense is a steady tailwind from a small base for a few companies. Pockets of continental Europe, notably Germany, looked a touch livelier than six months ago and are the growth drivers of many companies. Meanwhile, Sweden’s HVAC installation demand and Finland’s competitive dynamics remain the soft spots.

 

Margins & pricing: indexation and mix doing the heavy lifting

Across services and software, indexation against wages or CPI is partially protecting gross margins even as volumes wobble. In industrial tech distributors and component specialists, pricing discipline remains intact as U.S. end markets continue to accept rational price resets when needed. In retail, scale and physical locations matter: click-and-collect economics and the in-store attach that comes with it are partially offsetting last-mile costs. Moreover, some retailers we have met are now experiencing trends that had started a few years ago in North America, specifically in the beauty industry where pharmacies are becoming more serious competitors whereas demand for men’s beauty products is just starting to pick up.

 

Capital allocation: discipline over speed

The best acquirers are staying selective: more bilateral deals, fewer brokered auctions, and occasional structured step-ins (minority first, path to control) to balance risk and alignment. Return hurdles haven’t been lowered to chase volume. Integration playbooks are light where they should be, with an emphasis on governance, finance, pricing, and talent management. On the other side of the ledger, we saw sensible deleveraging plans post major integrations and a willingness to resume shareholder distribution as capex plans roll off. The common thread: cash conversion first, headlines later.

 

AI & productivity: real, specific, and not disruptive to moats (for now)

AI is already raising developer throughput and compressing implementation timelines and that’s flowing to feature velocity and better customer onboarding rather than headcount cuts. Where vendors own process knowledge and domain datasets, AI is enhancing stickiness, not undermining it. We saw no evidence of AI-driven churn in niche, mission-critical software. The lesson: generic models don’t erase switching costs, local workflows, or regulatory know-how. That said, monitoring the evolution and impacts of AI remains top of mind for us and for the companies we track.

 

Risk radar: what could wobble the thesis

Tariff and macro uncertainty are still delaying many decisions for US exposed companies and their clients. The situation could worsen if visibility on tariffs doesn’t improve in a timely manner. Also, we note that even for European-focused businesses, tariffs matter for business and consumer confidence which could eventually hit the P&L.

 

Implications for our positioning

  • Prefer quality of earnings: recurring, indexed, local, and cash-generative over volume-dependent stories.
  • Add selectively to industrial compounders where order intake is outpacing shipments and inventory headwinds are fading.
  • Back omni-channel retailers where demand comes from local markets, and integration synergies or restructuring stories convert to free cash flow.
  • Tilt exposure to domestic markets as well as stories with demand from infrastructure and public investments which have been resilient and sources of growth.

 

Bottom line

Being in the meetings reinforced a simple edge: culture, incentives, and operating cadence are compounding quietly while the cycle meanders. We’re favoring exposure toward businesses that don’t need perfect macro to create value, those with recurring revenue, pricing power, and disciplined M&A. That’s how we compound through the noise.