A Swedish activist speaks softly and carries a big stick

“SCLEROTIC companies abound in Europe,” says Christer Gardell, co-founder and managing partner of Cevian Capital, an activist hedge fund based in Sweden. That is an uncommonly pugnacious statement for a firm that operates behind the scenes and uses public pressure as a last resort. Unlike its louder American peers, such as Bill Ackman’s Pershing Square, Paul Singer’s Elliott Management or Dan Loeb’s Third Point, Cevian has never written a pointed open letter to a chief executive or waged a proxy battle (although Carl Icahn, an activist who has been known to call bosses “morons”, is one of its investors).

Its calm approach seems to suit corporate Europe. Cevian is the region’s largest activist fund, and one of the world’s biggest, with over $15.4bn in assets. It was founded by Mr Gardell and Lars Forberg in Stockholm in 2002; both still run it. Its “constructive” activism, focusing on only a dozen companies at a time, goes back to the founders’ time as chief executive and chief investment officer of Custos, a listed investment firm, in the mid-1990s.

Although European corporate governance is often compared unfavourably with America’s, Mr Gardell says it has many advantages. American management largely controls the process for nominating new board members, so an activist fund may need to wage a loud campaign just to get a seat at the table. In the countries where Cevian operates, its typical ownership stake of 5-20% is enough to easily, or even automatically, get a board seat. That said, it operates mainly in the Nordic countries, Britain, Germany and Switzerland, regarding governance in the wilds of southern Europe as too unpredictable.

Its signature move is splitting up or spinning off parts of companies, a tactic for which Mr Gardell earned the moniker of “butcher” from the Swedish press in the mid-2000s. Cevian believes that many conglomerate structures are too sprawling, and that simplifying them can be better both for managers (who will have an easier time running more focused companies) and for shareholders (who will have an easier time valuing them).

Perhaps the best example is the separation in 2012 of Cookson Group, a British industrial firm, into Alent, a chemicals company, and Vesuvius, a ceramics firm, that Cevian helped to engineer. The split more than doubled the combined value of shareholders’ investment. Cevian has also pushed for spin-offs at Volvo Group, a Swedish truckmaker, and Bilfinger, a German industrial-services firm, among many others. Such proposals often attract stiff opposition at first, as with its current recommendations for ABB, a Swiss-Swedish engineering firm, and ThyssenKrupp, a German steel giant. And Cevian has had failures. Bilfinger is one of the few examples of a truly struggling Cevian portfolio firm. But overall, performance is strong. Cevian returned 19.4% in 2016 alone. European activist funds returned 14.1% in aggregate, and American ones 12.8%, according to eVestment, a data provider.

Institutional investors, who often shunned or ignored activists a decade ago, now take the initiative to contact Cevian. Other activists are also stirring: more European firms are being targeted (see chart). Mr Gardell is sceptical that boisterous American funds will be able to make much headway into Europe, but he welcomes more competition. His fund announced its newest target—one that is close to home—on May 31st: Ericsson, a floundering Swedish telecoms firm.