Investing benefits both investors and society
Responsibility is one incentive when retail investors seek investments. Pharmaceuticals and healthcare is one of the most interesting sectors.
The Sijoitus Invest 2019 fair brought together investors at the Messukeskus fair centre in Helsinki in November. The event attracted both active and novice retail or individual investors.
“It is good for Orion to be seen at events like this. At the same time, you also hear about current issues,” says Ebba Hæggström.
Vesa Riihimäki, who attended the fair to find out about investment trends and meet Orionees, agrees.
“This is a good way for a pensioner to spend his time and it looks like my investment in is doing well. It is also good to hear that Orion has plans for growth.”
Hæggström and Riihimäki are two of Orion Corporation’s more than 65,000 individual investors. Tuukka Hirvonen, Communications Manager in charge of investor relations, says that individual investors are a significant shareholder group for Orion.
“They hold more than 40 per cent of the shares and more than 60 percent of the voting rights. An extensive base of individual shareholders brings stability to the ownership structure.”
According to Sari Lounasmeri, CEO of the Finnish Foundation for Share Promotion, retail investment connects society and households.
“From a societal perspective, investments by private citizens finance business growth. Listed companies whose owners have an opportunity to influence their investment are important for society.”
Private investors are interested in managing their own finances: gaining prosperity and getting a better return on their savings than they would in a bank account that pays almost no interest at all. More than 800,000 Finns have direct shareholdings – households have some EUR 35 billion in listed shares. Yet individuals have assets of almost EUR 90 billion idling away in deposit accounts.
“We don’t talk about or teach people about investing enough. We need a better understanding of financial matters,” says Lounasmeri.
Retail investors value responsibility in the company they invest in. In fact, responsibility is also attracting new people to investing. Responsibility, which increases trust and transparency, is one of today’s megatrends. According to Lounasmeri, consideration of responsibility has been on the rise in recent years: only sustainable companies can create value for their owners sustainably.
The investor barometer of the Finnish Foundation for Share Promotion and the Finnish Shareholders’ Association indicates that responsibility influences the investment decisions of more than half of retail investors. More than 40 per cent decide not invest in certain companies for corporate responsibility reasons and more than a third avoid specific sectors.
Finnish investors favour Finnish companies because it is easier to get information on them and it is in their own language. Finnish companies are also very successful in responsibility matters.
“On the other hand, geographic diversification is important: you should think about where a company's customers are, not just where it is based. There are a lot of companies on the Helsinki stock exchange that have international operations,” Lounasmeri says.
According to the investor barometer, pharmaceuticals and healthcare is the third most interesting sector. Lounasmeri says that there will continue to be a need for this sector that is boosted by the megatrend of ageing.
“We do not know exactly how the economy will develop, but pharmaceuticals and healthcare will always be needed.”
According to statistics from the Foundation for Share Promotion and Euroclear Finland, Orion has risen to eighth place in terms of the total number of household shareholders.
Investor Vesa Riihimäki is a former pharmacist. According to him, Orion was so close to his own field for such a long time that it felt natural to invest in the company. The fact that the company operates in Finland was also important.
“Orion is an obvious investment because half of my relatives are doctors and I grew up in a family of doctors. I invest in megatrends and growth trends and the ageing population needs medicines. I believe that Orion will also be able to address the current drug shortage with its own or generic products,” Ebba Hæggström says.
Hæggström also values the company’s Finnishness because home is where the heart is.
Orion’s Tuukka Hirvonen says it is great that Finnish retail investors are so interested in a Finnish pharmaceutical company.
“Investors are strongly committed and often like to choose the products of companies that they own. On the other hand, when an investor is familiar with the products of a company and thinks they are good and high quality, then its stock will naturally be attractive.”
Hirvonen says that dividends are important for many retail investors.
“At Orion, we listen to our owners and that's why distributing an annual dividend of a certain amount has been included in the company's financial targets.”
Over the past two years, the number of private investors in Orion has grown by thousands. Hæggström at least is pleased.
“Orion makes for a good, solid pillar in my portfolio.”
According to Lounasmeri, Finland needs more economic growth, which means business growth. This increases the importance of the ownership base. Households are an important owner group: they own almost one sixth of Finnish listed companies.
According to Hirvonen, Orion constantly improves its ways and channels of approaching retail investors. One innovation that will be visible to all concerns the announcement of results. In the future, that is, in February 2020, the Finnish-language recording of the CEO's results briefing for Orion's website will be replaced by an interview with him.
“We believe that as a format, the interview will be more interesting and rewarding for the audience. Result slides in Finnish with a live broadcast and an English-language recording of the briefing will continue to be available as usual.”
Orion would like to receive more feedback. We would like retail investors to tell us more about what they expect from the company and whether they are happy with current communications.
“I have no complaints,” says Riihimäki. Hæggström also intends to keep attending investing events in the future, because she feels they are an opportunity to meet her investment in person.
Text by Tarja Västilä
Photos by Sami Heiskanen
January 8, 2020