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In the second of my three articles on interesting tech stocks listed on the Helsinki Stock Exchange, I take a look at cyber-security business, F-Secure.

Who are F-Secure?

With a market cap of €532 million and F-Secure digesting the largest acquisition in it’s history in 2018 of the UK’s MWR Infosecurity for €96 million – the end of 2019 did not go quite as well as planned. The company had to lower revenue guidance and warn investors that the turnover growth outlook in 2020 would not match 2019 expectations of 27-30%. We will hear more when the company reports QIV 2019 results on February 12th.

The founder of F-Secure

F-Secure has been a pioneer for over 30 years in cyber security. The famous founder of the company was Risto Siilasmaa when he was a 22-year-old student. He continues in his role as Chairman of the company and now 53 years old old, he still owns almost 38% of the stock.

For those who have not heard of him, Siilasmaa is Finland’s Bill Gates. However, he announced in December 2019 that he will step down from Nokia in March 2020. He was first elected to Nokia’s board in 2008 and in 2012, was asked to save Nokia.

Siilasmaa served as Nokia’s chairman from 2012, at which time, the group’s market cap was €1.5 billion, until 2020 when the market cap was now €21 billion. He removed the majority of the top management in the process; everybody except CFO Timo Ihamuotila (CFO of ABB Zurich, Switzerland since 2017). Together they devised their plan and executed it perfectly.

The duo basically saved the company from bankruptcy and restructured it as a top three telecommunications network equipment vendor acquiring Alcatel/Lucent in April 2015 for €15.6 billion with an all stock deal.

The BIG Three

Nokia is one of the big three leading vendors in the telecommunications equipment industry, alongside Ericsson and Huawei.

The company’s network business derives revenue from selling wireless and fixed-line hardware, software, and services. As a result, the business is well positioned to be a major player in the 5g-network rollout in the 2020’s.

In 2018-2019 Nokia traded between the €4.5 – €5.5 range, but a major profit warning in October 2019 has seen the share price trading within the 3.25 to 3.75 range since.

I would not be touching Nokia for couple of quarters before we see how the 5G rollout is profiting the company.

Opportunity – what will Mr. Siilasmaa do next?

That’s the question. Will he oversee the growth of F-Secure finally to become the cyber security powerhouse that rules the world, or retire comfortably as one of Finland’s richest men, or something in-between?

He controls F-Secure with his stake of 38%. F-Secure on the other hand had a very good year in 2019 with +31.53% stock growth, but in 2018 it was down -39.46%.

Cyber security is an industry in 2019 with estimated total sales of €124 billion globally and growing 10% a year.

F-Secure has positioned itself for growth and now Siilasmaa is free to put all of his attention into the business and acquire more companies in this sector.

F-Secure closed at €3.39  on January 21st in the top of it’s 52 week range of 2.19 – 3.4. The company is not covered by any of the UK brokers, and only five Nordic brokers. Nordea Bank is bringing them to the Nordic Roadshow on March 11th and F-Secure is also participating in the Berenberg European Opportunities Conference 2020 on March 12th which will provide significant exposure to the stock.

With guidance lowered in December – this could represent an interesting opportunity to buy low.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Raine Lahtinen

Raine Lahtinen

Raine Lahtinen has spent over 25 years in wealth management and trading. His active investment days started when he attended University of Miami 1987-1991 majoring in International Finance and Marketing. He has experienced the highs and lows of the stock markets since the 1987 crash, Dot.com bubble 2001-2002, the 2008 financial crisis and the current record breaking rally.

Since 1995, Raine has been based in Brussels, Belgium in Continental Europe as an international financial advisor and director of investments in various UK IFA firms. He has written many popular columns about markets and investments during his professional life. His passion is finding undervalued listed stocks. As a Finnish native he specializes on Nordic and US stocks.

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