Although many report that institutional ownership in Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) was about 11.34% at the end of March, one investor points out that it’s actually greater than 25%. This demonstrates significant institutional interest in and support for the company as it transitions from being a struggling smartphone company and into an infrastructure, digital mapping and intellectual property company.
Computational physicist Seppo Sahrakorpi of Pilvi Computing Inc. notes in his recent blog that institutional ownership is significantly higher than what is often reported. He says reports of 11.34% institutional ownership are based only on American Depository Receipt shares at the New York Stock Exchange.
However, Nokia’s main listing is at the Helsinki Stock Exchange, as it is a Scandinavian company. He estimates that at least 10.3% of Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s float in Helsinki is institutionally owned. When combining the two exchanges, it makes up about 25% of the float, he says, and that doesn’t include shares on the Borsa Italiana stock exchange. He notes that 78% of Nokia’s shares are traded on the Helsinki exchange.
Sahrakorpi has also been keeping track of the combined short interest in Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) and says it’s at extremely low levels. Writing on Seeking Alpha, he said it’s currently at around 1.28% of the float, providing further proof of support for “the New Nokia.”
Going long on Nokia
The investor has been long on Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) since shares were trading at around $2.50 in fall of 2012. He told ValueWalk that he “got lucky and made a nice return” thanks to the company’s sale of its Devices and Services division to Microsoft Corporation (NASDAQ:MSFT). He said he still owns about half of his pre-sale shares because he thinks Nokia continues to have “great long-term prospects with limited downside risk.”
Sahrakorpi believes Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) is no longer a speculative play because of that sale. He pointed to the recent credit rating increases from Standard & Poor’s, Fitch and Moody’s, noting that Nokia has been around for about 150 years and is no stranger to changes in direction.
Nokia, bit by bit
“The Networks division provides solid income and has now turned around to profitable, but perhaps a bit boring segment, providing 90% of Nokia’s revenue,” he told ValueWalk in an email. “This is the baseline that will pay dividends and protect one’s investment from tanking too badly.”
He sees Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s Intellectual Property and HERE mapping segments as offering “more interesting upside potential, especially in Intellectual property.” He sees especially significant upside after Nokia finalizes a deal with companies for its non-standard essentials patents.
Sahrakorpi also notes the automobile applications for Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s HERE maps. He says about 80% of all in-car navigation units use HERE, which means significant licensing revenue. He believes HERE’s big distinguishing factor is “that it provides industry leading mapping solutions” without extra privacy packages or questions of ownership of the data. For example, Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG)’s Maps are part of its larger business model of tracking users and serving up relevant ads. He also says that while Nokia’s HERE maps have brought excitement to investors, but he’s betting on intellectual property being a bigger upside factor.
“Personally my bet is more on aggressive IP monetization in the next 0-2 years, and then growth in 5G implementation and providing high quality wireless networks,” he told ValueWalk.