Companies in the Nordic region consistently perform well. In fact, up until 2015 Nordic stock markets were outperforming US markets, with higher annual returns since 1965.
What sets the Nordics apart?
There are many reasons why Nordic companies are doing well. These include:
- Global reach. The success of global companies such as IKEA, H&M, LEGO, Volvo, and Spotify to name a few.
- Consistent innovation. Nordic countries consistently dominate the top 15 places in the Bloomberg Innovation Index, and are known for innovations in areas such as healthcare and biotech.
- Technology hubs. Stockholm has the highest number of tech startups in Europe, and the second-highest worldwide after Silicon Valley. It has also gained attention recently for its “unicorn factory” status.
ESG factors could play a part in investability
Another recent theory for the market’s success is a focus on ESG (Environmental, Social and Governance) factors which are at the core of many Nordic companies.
ESG is not only about ethics; they are financial indicators too.
Not so long ago, ESG investing was considered fringe. However, this is now a mega-trend in the investment space, and is an increasingly popular way for investors to evaluate companies, and help them avoid financial risks and damage to portfolio performance.
For example, the 2010 BP oil spill and Volkswagen's emissions scandal rocked share prices significantly, resulting in billions of dollars of associated losses.
Nordic companies are pioneering the future of ESG, and are considered world leaders when it comes to sustainability.
The latest on Nordic stocks and insider buying activity
Bergman & Beving Aktiebolag (BERGB:SS)
Bergman & Beving is a Swedish industrial trading company, and is listed on the OMX Nordic Exchange Stockholm with a market capitalization of SEK 4.3 billion.
In its FY 2020/2021 report published in July 2021, President & CEO Magnus Soderlind commented:
“The 2020/2021 financial year was a clear step in the right direction for Bergman & Beving. Revenue increased by 9% in local currency, of which 5% was organic, and profit after financial items amounted to MSEK 212, an increase of 37% compared with MSEK 155 in the preceding year.”
“After a year of successful development, Bergman & Beving is a significantly stronger group. Thanks to our decentralized organizational model and entrepreneurship-driven culture, where strategic and operational decisions are taken close to the customer, we are well positioned to take advantage of future growth opportunities.”
With these comments, it is interesting that 2iQ’s insider transaction data shows that on 15 July 2021, Soderlind bought:
- 100,000 BERGB shares
- At a price of SEK 155.70 per share
- This purchase cost the insider SEK 15.6 million (approx. $1.8 million)
This is a bullish signal that the CEO has confidence in the company and we will track the stock’s performance to see whether future performance matches Soderlind’s expectations.
Vestum AB (WESC:SS)
Vestum is a Swedish investment company focused on the construction and infrastructure sectors.
In terms of insider buying activity, Vestum is of particular interest because of ‘cluster buying’ in June and July of this year. This is where multiple insiders buy stock within a short period of time.
Cluster buying is a powerful indicator. And our insider transaction data shows that between 15 June 2021 and 6 July 2021, three insiders at Vestum purchased stock. Those who bought shares were:
- CEO & Founder Conny Ryk
- Chairman Per Ahlgren
- Board member Anders Rosenqvist
Combined, the three insiders made 12 purchases, buying 401,668 shares. In total, they spent about SEK 17.6 million (approx USD $2.0 million) on Vestum stock.
Not only this, but two of the insiders are C-level, both with investment backgrounds. This signals that they have used their knowledge of operations and the market to inform their decision to buy.
These points are all bullish indicators of their confidence in the company, and that the future of Vestum is likely to show a positive trajectory.
Flügger Group A/S (FLUGB:DC)
Flügger Group is a small Danish company that designs and manufactures home improvement products. It’s listed on the Copenhagen Stock Exchange and currently has a market capitalization of DKK 2.2 billion.
In its 2020/2021 annual report, CEO Sune Schnack has said:
“2020/21 was unpredictable, and unlike any other year. At Flügger, we can look back on a financial year in which, despite great unpredictability, we passed several financial milestones. We delivered solid results in all four quarters of the year.”
This is indicated by the figures which show:
- Revenue was DKK 2,162 million this year, up 14% from last year.
- A 174% growth in earnings, from DKK 83 million the previous year to DKK 228 million, equating to an EBIT margin of 10.6%.
- In the 2021/22 financial year, revenue is expected to be DKK 2,500–2,700 million and EBIT in the region of DKK 220–270.
In terms of insider transactions, research suggests that company insiders at firms with a small market cap are more likely to earn greater profits on their share purchases than their counterparts at large firms.
In keeping with this, 2iQ’s data shows that on 28 June 2021, the Independent Chairman of the Board, Michael Mortensen, purchased:
- 44,973 FLUGB shares
- At a price of DKK 739.79 per share
- This purchase cost him approximately DKK 33.27 million (approx. USD $5.3 million)
- Which increased his holding by 5%
This trade caught our attention because it is a large purchase, suggesting that Mortensen is very confident that the shares will continue to move in an upward trajectory.
Secondly, as Chairman, the insider is experienced within the industry which means he is likely to know Flügger’s market well, and his history suggests he is adept in trading decisions.
What’s next for the Nordics?
As we can see from these three companies, insider transaction data can be useful in determining a company’s current and future success in the stock market. The Nordics often show bullish signals, and this is likely to continue in the future.
For more on the latest Nordic insider buying reports, visit the 2iQ blog.