Valmet’s shareholders: a diversified group with different investment styles and an increased focus on ESG

August 26, 2021

 

Valmet has gathered a strong reputation as a quality investment among the investors and analysts. Now it is time to take a closer look at Valmet's shareholder base: where are the shareholders from, which investment styles do they use and how has the ESG investors' ownership developed. The data has been provided by CMi2i.

Valmet has a diversified group of investors in many countries. On the 16th of July, 2021, the largest ownership concentrated in Finland with a total portion of about 44.9% of the shares outstanding. The second largest investor group came from the United States, owning about 17.2% of the company. Investors coming from four European countries including Sweden (7.7%), the United Kingdom (6.8%), France (4.9%) and Germany (3.4%) had a combined ownership of about 22.7% of the shares outstanding. Investors from the rest of Europe held about 8.9%, while the corresponding numbers for investors coming from the rest of the Americas and other parts of the world were 0.2% and 0.6%. The portion of the unidentified investors was about 5.5%. 

The geographical shareholder structure has clearly changed compared to January 2019. Domestic ownership has fallen about 1.0 percentage points, the US has risen about 1.5 percentage points and the rest of Europe about 0.2 percentage points. Meanwhile, the portions of the UK, France and Germany have fallen 1.7, 0.6 and 0.8 percentage points respectively. Increases for the rest of Americas and the rest of the world were about 0.1 and 0.1 percentage points. The biggest change concerned the Swedish ownership, which has increased about 3.3 percentage points. Compared to the Nordic average provided by CMi2i, Valmet has strong French, Swedish and German ownership while the amount of the UK investors is below the Nordic average.

We can also see changes in the investing styles used by institutional investors holding Valmet. However, according to CMi2i, it is not atypical that the investing styles used vary quite a lot between different points of time. According to the newest data received on 16th of July, 2021, Growth style was the most popular investing style used by about 42.4% of the institutional shareholders of Valmet. According to Investopedia, Growth investing is a stock-buying strategy that looks for companies that are expected to grow at an above-average rate compared to their industry or the broader market. In January 2019, the corresponding number was about 34.0%, marking a change of about 8.4 percentage points.

Index style was the second most popular used by about 7.6% of the shareholders (about 9.6% in 2019). Index funds typically follow a passive investing strategy, and for example seek to mimic the performance of a certain market index, such as EURO STOXX or OMXH25 indices. GARP or Growth at a Reasonable Price style was the third most popular investment style used by approximately 5.8% of the shareholders. In January 2019, about 8.6% of the shareholders used GARP.

Value style was used by about 3.0% of the shareholders, Hedge Fund style by about 2.0% of the shareholders and Dividend Yield style by about 0.5% of the shareholders. The corresponding portions in January 2019 were 5.0%, 1.0% and 3.1%. It is notable that while Hedge Fund style increased its popularity quite significantly from 2019, Dividend Yield style diminished about 2.6 percentage points and Value style about 2.0 percentage points. It is also to be noted that for about 7.1% of the shares owned by institutional investors, the investing style could not be identified using the above-mentioned categories. Non-institutional shareholders held about 25.9% of the shares issued and for most of them the investing style could not be identified. The total portion of the identified shares was about 94.5% of Valmet’s outstanding shares.

Sustainability is at the core of Valmet's business strategy and operations, and key in moving our performance forward. Therefore, it has been very nice to see that the actions taken and their communication have clearly reached the investing ESG audience. In January 2019, approximately 5.2% of the free-float stocks of Valmet were owned by ESG funds. In July 2021, the corresponding portion was 11.4%, meaning a 6.2 percentage point jump. The growth in ESG investing has been fast: in December 2017 the portion was only about 1.0%.

According to CMi2i, based on their strategy, ESG funds can be sorted in two categories, ESG Incorporation and Sustainable Investment. ESG Incorporation category includes strategies that use ESG criteria as a central part or as binding factors of their security selection and portfolio construction process. ESG Incorporation strategies typically have explicit sustainability criteria that the invested companies must meet. Correspondingly, a fund’s strategy is defined as Sustainable Investment if it is described as focusing on sustainability, impact or environmental, social, and governance factors in its prospectus or other regulatory filings. The main difference between these two categories is the following: In order to be included in ESG Incorporation category a fund has to have more concrete and exact ESG screening systems and strategy, whereas Sustainable Investment status is somewhat easier to achieve as sustainability is considered more as an abstract value that guides the activities. ESG Incorporation was used by approximately 7.2% of the funds investing in Valmet (about 2.8% in 2019) and Sustainable Investment by approximately 3.8% of the funds investing in Valmet (about 2.4% in 2019). The remaining 0.4% of the 11.4% include funds identified as ESG funds by CMi2i using a proprietary ESG keyword search and qualitative analysis.

In conclusion, it is apparent that there have been many changes in the shareholder structure of Valmet since January 2019. Valmet has strong domestic and European ownership with a little bit of color coming from the other countries around the world, mainly the US. The shareholders' interest towards the ESG topics has grown and we are happy to see that many ESG funds have started to invest in Valmet. Growth style has remained as the most popular investing style used by Valmet’s institutional investors.

Needless to say, Valmet warmly welcomes shareholders from all geographies using any investment style!