Röko: A Company That Could Grow 100 Times

I look for businesses that are high-quality and fairly priced. The best ones are run by founders or management teams who care about shareholders as much as their own success. These companies share three traits: they earn strong returns on their money, they can reinvest those returns well, and they don't have too much debt.

Over time, I've noticed five special types of businesses that can create incredible long-term returns:

Today, I want to tell you about Röko, a serial acquirer buying small private businesses across Europe.

Founded in 2019 by Fredrik Karlsson and Tomas Billing, Röko went public in Stockholm in March 2025. The company buys profitable businesses that are asset-light (don't need lots of physical stuff), have strong management, and dominate their specific niches. Think of it like a mini Berkshire Hathaway for small European companies.

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Fredrik Karlsson is the CEO, and he's exceptional at deciding where to invest money. Before Röko, he ran a company called Lifco from 1998 to 2019. During those 20 years, he made shareholders 100 times richer. He did this by being brilliant at capital allocation and keeping things simple and decentralized.

Karlsson and Billing go way back. They met while studying Russian as military interpreters in Sweden, then reconnected at Stockholm School of Economics. At 25, they survived a winter mountain expedition together by digging a snow cave during an unexpected blizzard. That kind of history builds serious trust.

They describe Röko as 70% Lifco (decentralized culture and smart acquisitions) and 30% Nordstjernan (Billing's old company, focused on consumer businesses and partnering with owners).

Why did they leave their previous jobs? Billing left Nordstjernan in 2018 to start something new and approached Karlsson. Karlsson planned to stay at Lifco, but a disagreement about compensation with Lifco's owner in 2019 changed his mind. Interestingly, it wasn't about wanting more money—he felt the agreement didn't reflect his performance fairly. He still liked Lifco enough to buy more shares even after leaving. Soon after, he and Billing founded Röko.

Röko's competitive advantages come from its culture and structure. Warren Buffett once said that if you use the conglomerate structure wisely, it's perfect for long-term growth. Röko does exactly this.

Two core principles drive the company:

Simplicity: Karlsson hates unnecessary bureaucracy and complexity. His shareholder letters at Lifco were short, honest, and clear—no corporate jargon or fluff.

Decentralization: Röko's headquarters has only 8 people. Like Berkshire Hathaway, headquarters allocates money, while each business focuses on operations. When Röko buys a company, the original founders keep 20-30% ownership. This keeps their entrepreneurial drive alive.

This setup gives Röko a huge advantage: speed. When problems pop up, they can call headquarters, set up a quick meeting, and make decisions the same day. Karlsson prefers immediate email and phone conversations over waiting for formal board meetings.

Speed also helps in acquisitions. Private equity firms often use lots of debt, which means they need to report tons of information to lenders. Röko doesn't have these requirements, so they can move faster when buying companies.

Another smart move: Röko doesn't limit itself to specific industries. At Lifco, Karlsson noticed that the "systems solutions" segment (which wasn't limited to one industry) grew 10 times from 2014 to 2024, while the dental segment only doubled. Being sector-agnostic means Röko can avoid overpaying in hot markets and has way more potential companies to buy.

Röko follows three simple rules:

Imagine you're a successful business owner. You've spent your life building this company, taking big risks, and you're incredibly proud. Your employees feel like family because they helped build everything.

You're getting older and thinking about succession, but your kids don't want to run the business. You still love what you do and want to keep working, but you also want a trusted partner. Plus, all your wealth is tied up in the business, which feels risky. Selling could secure your legacy, spread out your risk, and reward your hard work.

But you'll only sell to someone you trust. Private equity firms might terrify you—they often cut costs aggressively, lay off loyal employees, and scrutinize every detail of your operations. Then after five years, they'll probably sell to another PE firm.

Röko offers something completely different:

For many small European business owners, this is incredibly appealing. It's partnership without interference.

Röko currently trades at about 41 times forward earnings. That seems expensive.

But let's look deeper using a discounted cash flow analysis with these assumptions:

Result: Fair value is around 2,502 SEK. Current price is 2,484 SEK. That's roughly fair value.

However, Röko's valuation depends heavily on growth expectations. In a recent interview, Karlsson said they achieved 17% growth in 2024—a weak year—while also reducing debt. He noted that serial acquirer companies have been the best performers on Stockholm's Large Cap Index, averaging 15-20% annual growth over 10-20 years. He's confident Röko can hit these rates long-term.

So while the valuation seems optimistic, it depends on Karlsson's ability to meet expectations and your confidence in his capital allocation skills.

I've started a small position in Röko and will add more if the price drops to more attractive levels.

Three key reasons:

That's the Röko story. A young company with massive potential, led by one of Europe's best capital allocators.