NEW YORK, United States — Last year didn't end well for Hennes & Mauritz AB. And this year has started with a controversy over a "monkey hoodie."

But the top performing Swedish large cap fund is betting on a turnaround.

“They have a better insight of the disease and measures now,” John Hernander, chief investment officer at Nordea Asset Management, said by phone on Monday. “A lot of the initiatives by the company will have a positive effect in the coming year.”

H&M plunged in 2017 after sales growth weakened, especially in the fourth quarter. Some 51 percent of analysts advise clients to sell the shares, the biggest proportion of negative ratings since at least early 2003, according to data compiled by Bloomberg. The stock is down more than 55 percent since reaching a high in March 2015.

The market has priced in “extremely low” growth and additional pressure on margins, according to Hernander, who from Stockholm oversees 100 billion kronor ($12 billion) as head of Nordic, Finnish and Swedish equities.

“The H&M stock has reached a point where a very negative scenario is priced in,” he said. “An investment in H&M here and now will be a good deal long-term. But you don’t know exactly when you will be paid.”

Hernander manages Nordea Swedish Stars with partner Filippa Gerstadt. They invest with an horizon of 3 to 5 years and uses a bottom-up process with a focus on companies. The fund returned 18 percent in 2017, which was the best among Swedish large cap funds, according to Morningstar. H&M is its second largest holding after the fund bought the stock throughout 2017.

Its biggest holding is Volvo AB, which contributed strongly to the return in the past year. Hernander said the fear that "something irrational" will happen because of Zhejiang Geely Holding Group Co. becoming a large owner is exaggerated. Instead Geely could open doors in China, he said.

“There will be a very good cash flow in 2018,” he said. “It’s easy to see Volvo with 30 to 35 percent upside from here. There are few other industrials with the same potential.”

By Jonas Cho Walsgard; Editor: Jonas Bergman, Tasneem Hanfi Brögger.