Several small private shareholders joined SAS during 2020, after it looked too risky for the Norwegian competitor. It appears that from December 2019 to the end of September 2020, the share of SAS became much cheaper, and the share fell by 70 per cent to NOK 1.70.
Then the stake, as the chart below shows, received a massive boost and then fell back to NOK 1.7 at the end of 2020. But SAS’ share is up just over NOK, 60 percent. Investors who thought SAS was cheap two years ago are on a rampage.
– When we entered 2020, SAS had 4,000 private Norwegian shareholders: it doubled to 9,000 in the third quarter and increased further during the fourth. At the beginning of 2021, 22,000 Norwegians owned stock in SAS, and today there are 23,000, general manager Christine Skaug at AksjeNorge tells Nettavisen.
forced to enter
She says many bought SAS shares in 2020 when the Norwegian company struggled and filed for bankruptcy protection. And so SAS became the airline that the Norwegians saw better opportunities for.
In the first half of 2021, the price of SAS rose slightly, and new investors thought SAS was a good choice and got a positive feeling. But then the stake in SAS went down a lot, so the new shareholders of SAS lost a lot of money, says Skaug.
– How many then?
– Our numbers indicate that they exited 2020 with SAS shares for NOK 577 million. The value on July 1 was about 140 million, then the share of SAS fell even more. Skoog thinks we’re probably talking about 450 million in losses.
So far this year, SAS’ share is down 56 percent. SAS stock fell sharply on news that it will have to raise NOK 9.5 billion in new capital from the owners and convert debt into equity for NOK 20-30 billion. This means severe dilution for the existing owners, the values will be distributed over a larger number of shares.
– This story sounds very familiar from What happened to the NorwegianWe have experience in raising capital. Skoog says shareholders who don’t follow through and don’t subscribe to new shares risk more dilution.
If SAS goes bankrupt, the loss will be close to 600 million. The 23,000 Norwegian SAS owners must also decide:
Even if they buy new shares in a capital increase, they are diluted. This is primarily due to all debts that will be converted into new shares. But don’t use small savers Subscription rights which is distributed, the dilution becomes greater.
Any subscription rights to the market can usually also be sold. But we don’t know yet if subscription rights will be released.
tends to fall
– The experience so far when companies raise more capital is that the share price drops dramatically in part. We don’t know if that drop is within the current price, what the new subscription price for the stock will be, and how much of the dilution is.
The question is also how easy it would be to get 9.5 billion in the market today with the strike in mind. It can be difficult to raise a lot of money without resorting to discounts, Skoog says.
She says the best thing now is to learn a little about Norwegian history and follow what SAS has to say in the future. You must decide if SAS stocks are something you should own: do you want to participate in a possible new downturn, or are you going to give up now? In today’s market, you get 55 øre per share.
Don’t sit quietly
Skoog warns against the old advice to sit still in the boat when there are turmoil in stock markets. There is a big difference here in investing in a broad based stock fund or in a single stock. Skoog doesn’t want any specific idea of whether SAS is a good investment, but he says:
– I advise private shareholders to stick their fingers on the ground: what do I own, what do I think about the future of the company. For many, the price drop has already cost a lot, but they must now ask themselves the question of whether faith has led to hope.
Skoog says the most important thing for the future is to stay up to date with SAS news. This applies not only to the strikes of pilots, but also to the financial side. What does SAS say about the capital increase – issuance.
The experience was from Norwegian Not many small savers did anything with the subscription rights that were given to them in the issuance. The present values of the dilution are then guaranteed if the subscription rights are granted to the shareholders.
What is the state doing?
Small investors should also check whether the Norwegian state will own shares in SAS by converting the debt they have into equity. What does the state do after the imposed blockade? Skoog warns that when large investors sell in large quantities, the price tends to fall.
Perhaps the biggest problem facing SAS is poor reputation and mistrust. Skoog says senior portfolio manager Christian Tonal at Alfred Berg and equity strategist Paul Harper Markets at DNB in recent weeks have toured Norway and spoken to small savers about stock recommendations.
Their advice was to invest in high-quality stocks. That is, companies with strong earnings, strong balance sheets, and good management. The question is how many points can SAS score here.
He owns shares for 164 billion
AksjeNorge’s half-year stats otherwise show that as of June 30, 562,000 Norwegians owned NOK 163.8 billion worth of shares and titles. On average, it amounted to approx. 290,000 NOK per shareholder. 70 percent of private shareholders are men, and the proportion of women has risen to 30 percent.
Every sixth private equity investor owns an Equinor stake, while one in seven owns Norwegian Air. This is how Norwegians invest in aviation. In addition, they owned heavyweight companies such as DNB, Hydro, Telenor, Orkla, Yara and Storebrand, as well as (savings) banks.
What catches your eye about development in the second quarter?
– It’s interesting to see that Norwegians are still investing in the stock market, and the Oslo Stock Exchange has only landed in June so far this year.
We see that among the new shareholders in the second quarter, three out of four shareholders were over 40 years old. It has been a long time since adults were in the majority, but perhaps many young people have come back to life. And Skoog thinks they’re back, spending the money again, and preparing for higher interest rates.
There are also regional differences. Rogalendingene has more oil and energy shares in the portfolio than those in Oslo, and therefore has performed better. On the other hand, there are risks associated with choosing only one sector.
Skoog says Røkke’s Aker Horizons has doubled the number of shareholders. This is due to the merger of Aker Offshore Wind and Aker Clean Hydrogen with Aker Horizons in June,
— In doing so, Aker Horizons acquired 22,700 new shareholders overnight, says Skoog.
“Explorer. Unapologetic entrepreneur. Alcohol fanatic. Certified writer. Wannabe tv evangelist. Twitter fanatic. Student. Web scholar. Travel buff.”