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Steven Chen
Steven Chen
Articles (70)  | Author's Website |

A Quick List of Nordic Picks

The region offers a sizable pool of quality businesses for global-minded investors

January 16, 2020 | About:

When it comes to stock picking outside of the U.S., we have found that Nordic countries often offer a sizable pool of quality businesses for global-minded long-term investors. The region possesses a stable political system, sound public finance, highly-educated people and a business-friendly attitude.

Compared to most countries in the world, Nordic companies are more focused on sustainability. They are also more shareholder-friendly, less financially leveraged and have sound corporate governance, in our experience. In this crowd, it is not difficult to dig out some good capital allocators with a proven track record of superior returns on capital alongside meaningful growth in shareholder value. A few of them are already market leaders in their respective domains internationally (if not globally yet).

Below, we put together a list of some of our picks of high-quality names in the region.

Novo Nordisk

Novo Nordisk (OCSE:NOVO B) is a global developer of drugs to treat chronic diseases, including diabetes, obesity and hemophilia. Although headquartered in Denmark, the company has a presence in 170 countries, with the U.S. being the largest revenue contributor and China being the most significant growth driver.

Novo Nordisk dominates the world’s insulin supplies as well as the obesity value market. For more than a decade, the business has delivered a superior and improving return on invested capital (from below 20% in 2004 to more than 100% for recent years) while having grown its free cash flow per share, as described below (currency is the Danish krone, $1 = 6.71 krone).

Evolution Gaming

Evolution Gaming (OSTO:EVO) is one of the leading providers of B2B live casino solutions in Europe. The business currently serves approximately 150 gaming operators, including many of the largest across the continent, as well as several land-based casinos. Although domiciled in Sweden, the majority of the company’s employees are based in Latvia and Malta, and ex-Nordic Europe accounts for the largest revenue share.

Through a B2B2C model, Evolution Gaming has been able to generate stable, small-ticket, recurring cash flows out of commission of the game win (i.e., player bets minus player wins) as well as monthly fees for dedicated tables (customized exclusively for some individual operators).

Per the chart below, Evolution Gaming generated extraordinarily high returns on capital (around 100%) and increased its free cash flow per share just within a couple of years (currency is the Swedish krona, $1 = 9.50 krona).


SalMar (OSL:SALM) is one of the world’s leading producers of Atlantic salmon, with farming operations in Norway, Scotland and Iceland. Although based in Norway, the company sold directly to 47 countries as of fiscal 2018, with Europe being the most significant destination, followed by Asia.

Owning the unique intangible assets of production licenses in critical regions and being a low-cost producer with scale, SalMar was able to generate high returns on capital. As you can see below, the return on invested capital was mostly above 15% for the past decade or so. At the same time, the annual free cash flow, although being a bit volatile, increased gradually from 2004 to 2018 (currency is the Norwegian krone, $1 = 8.88 krone).

What is your favorite Nordic stock? Feel free to comment below.

Disclosure: The mention of any security in this article does not constitute an investment recommendation. Investors should always conduct careful analysis themselves or consult with their investment advisors before acting in the financial market. We own shares of Novo Nordisk and Evolution Gaming.

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About the author:

Steven Chen
Steven CHEN is a quality-focused investor (with bottom-up opportunistic approaches), an ex-hedge fund analyst on Wall Street, a serial entrepreneur, computer scientist, and free-market capitalist.

Steven is the Managing Partner of Urbem Partnership, a value/quality-focused investment partnership fund (www.urbem.capital), and Urbem Capital, the research boutique that focuses on the highest-quality 0.1% of all public companies worldwide.

Visit Steven Chen's Website

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