#60 Torbjörn Arenbo: Capital Allocation and Value Creation

Torbjörn Arenbo is the Chief Analyst and Head of Corporate Advisory Sweden at Danske Bank. He has 25 years of experience working as a corporate finance advisor, portfolio manager, and risk manager. Our conversation is centred around Torbjörn’s book Capital Allocation and Value Creation, published in 2023.

For more info about the podcast, go to the episode page and make sure to follow us on X/Twitter. We love to hear your thoughts on what you like and what we can improve, so please give us your rating and a review. You’re also very welcome to tell us about great authors, books, and investors you want to hear on the show. Thank you! /Eddie & Niklas with team

This episode was recorded on June 5, 2024.

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Episode Chapters

(00:00) Introduction by Niklas & Henrik

(02:25) Welcoming Torbjörn

(06:11) Sources of inspiration for Capital Allocation and Value Creation

(08:06) Who is the book for?

(10:10) Capital Allocation and Value Creation

(14:17) Different allocation practices based on the base rates for success

(19:58) The obsession for growth

(22:25) Capital allocation at Nibe

(25:15) Keeping managers on board after an acquisition

(26:33) The three value drivers

(29:53) Cost of capital

(32:40) Empirically, are managers good enough at capital allocation?

(36:56) Earnings quality

(41:17) Improving margins vs improving returns

(43:25) Henrik’s view on manager’s allocation capabilities

(46:47) How companies should handle challenging market situations

(51:55) Why Torbjörn quit his job as a portfolio manager

(53:47) Book discussions

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Books Mentioned

• Capital Allocation and Value Creation - Torbjörn Arenbo
• The Essays of Warren Buffett - Lawrence Cunningham
• Capital Returns - Edward Chancellor
• Expectations Investing - Michael Mauboussin
• Think Twice - Michael Mauboussin
• Competitive Advantage - Michael Porter
• CEO Excellence - Dewar et al

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Companies Mentioned

• Bergman & Beving
• Lagercrantz
• Addtech
• Nibe
• Atlas Copco
• Ericsson
• Telia
• Getinge

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More on Torbjörn

LinkedIn - Torbjörn Arenbo

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About the Podcast

Intro episode: https://www.redeye.se/podcast/investing-by-the-books/817383/0-intro-to-investing-by-the-books

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What is Investing by the Books?

Investing by the Books was founded by Henrik Andersson, Bo Börtemark, Mats Larsson and Michael Persson. It has published hundreds of book reviews in the past 10 years and operates on a non-profit basis.

Visit the website: http://www.investingbythebooks.com/

Follow on Twitter/X: https://twitter.com/Investbythebook

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What is Redeye?

Redeye is a research-centered boutique investment bank from Stockholm. Founded in 1999, Redeye cultivates investors through timeless knowledge, a humble attitude, and a strong focus on quality.

Visit the website: https://www.redeye.se/

Follow on Twitter/X: https://twitter.com/Redeye_

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Disclaimer

Notice that the content in this podcast is not, and shall not be construed as investment advice. This information is meant to be informative and for general purposes only. For full disclaimer, visit Redeye.se