It was perhaps no surprise to see Europe’s formerly most valuable business oust its chief executive unceremoniously after recent troubles dragged the share price down.
Never mind that the weight-loss drugs Ozempic and Wegovy had helped to fatten the stock market value of Novo Nordisk (stock market ticker: NOVO) to the point where this exceeded the economic output or gross domestic product of its home country, Denmark.
That was then but this is now, so Novo has shown Lars Fruergaard Jorgensen the door. Farewell, matey, and thanks for everything; we will never forget old whatsisname!
Even so, in the same week that Britain reset its trade relations with the European Union, this long-term investor continues to look through short-term drama in pursuit of capital growth on the Continent.
It helps to keep a sense of perspective. As reported here in June 2021, I invested 2 per cent of my life savings in Novo, paying the equivalent of 254 Danish krone per share, allowing for a subsequent two-for-one stock split.
Paper profits are all very well but we haven’t really made a penny until we sell. So I sold half at DKK926 last August, as also reported here at the time.
That was just as well because disappointing drug trials and the announcement of Jorgensen’s exit helped to depress the Novo share price. So I bought some more on Monday, paying just under DKK434 — less than half the price at which I sold last August.
• All the ways Ozempic will change our world, from alcohol to airlines
I have no idea what will happen next, especially given the risk that America might punish Denmark for opposing its bid to take over the latter’s protectorate of Greenland. But Novo’s appetite-suppressing drugs serve real needs for many people who struggle to eat less, after millennia of evolution equipped us to deal with the occasional scarcity of food but not perpetual plenty.
The Novo Nordisk chief executive Lars Jorgensen was given his marching orders earlier this month
SHAWN THEW/EPA
True, Novo’s bigger rival, the American firm Eli Lilly (LLY) has even more effective appetite-suppressants, Mounjaro and Zepbound. So I am happy to have also invested 2 per cent of my life savings in Eli Lilly, paying $441 per share in July 2023.
Eli Lilly has soared to trade at $713 on Friday, making it my sixth most valuable shareholding. The pharmaceutical giant is a much more diversified business than Novo, making it less risky, but I hope the latter’s specialisation in weight control will help me to put on pounds again, eventually.
Similarly, two other European companies enjoy rising demand to earn top ten rankings in my life savings. Adidas (ADS), the German sports goods giant, is now my ninth most valuable holding, while EssilorLuxottica (EL), the Franco-Italian firm that is the largest eyewear business in the world, ranks fourth in my “forever fund”.
• Wetherspoon’s breakfast helps it serve its shares sunny side up
Sport is big business, as the Fifa Club World Cup 2025, which starts next month, will remind us. Chelsea and Manchester City are among 32 teams competing in the tournament, which is being held in America for the first time.
However, for reasons we don’t need to get into here, there are many sports clubs and associations that prefer not to buy American sportswear, which was one reason I bought ADS shares for €61 in July 2014, as reported here back then. They traded at €214 on Friday.
Adidas has been the official supplier of World Cup footballs since 1970, alongside a lot of other kit, and has also benefited from the post-Covid increase in working from home. Plenty of people who used to wear skirts and heels or suits and ties for most of the week are more likely to be found in tracksuits and trainers these days.
Adidas recently collaborated with Beyoncé’s activewear brand Ivy Park
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While many are returning to work in the office again, the fashion phenomenon of “athleisure” seems unlikely to disappear altogether. Making sports shoes and shirts in Asia and selling them across the globe in dollars, euros or sterling is a profitable business threatened by double-digit tariffs imposed on imports into America. However, I hope that will prove no more than a short-term setback for long-term healthy returns from fitness.
EssilorLuxottica is not a household name in Britain but makes about a third of all the optical lenses on this planet. It is a major beneficiary from the twin trends of people living longer and spending more time looking at small screens.
The AI-powered Ray-Ban Meta x Coperni Wayfarer
RAY BAN
Poor eyesight used to be regarded as part of getting older but fewer folk are prepared to accept that now, either in emerging markets or developed economies. More recently, there is an exciting joint venture with the Facebook owner, Meta Platforms, to produce glasses that look just like ordinary Oakleys or Ray-Bans — probably EssilorLuxottica’s best-known brands — but with artificial intelligence options or hearing aids.
As part of the target audience on both fronts, this old boy can see clearly the benefits of paying €96 a share in March 2019, as reported here at that time. They cost €252 on Friday.
Sad to say, none of the above yields significant dividend income after continental withholding taxes. But I remain grateful for substantial capital growth and good reasons to hope there might be more yet to come.
My scientific experiments aren’t going well …
Risk is the price investors pay in pursuit of higher returns than guaranteed bank deposits could ever provide. But, when our hopes are dashed, it hurts to feel like a fool who has been parted from his money.
That’s why it is important for this column to report the rough, as well as the smooth, of stock market investment. Or, in the case of shares whose price fell by more than than 10 per cent after I bought them, Cowie’s Clangers.
Continental equities are no exception to this rule, as painfully demonstrated by the Danish vaccine-maker Bavarian Nordic Research Institute (BAVA) and the Finnish forestry group UPM Kymmene (UPM).
Please don’t laugh but I paid 258 Danish krone last August for Bavarian shares that cost only DKK168 this week — ouch! — and €29.70 in August 2023 for UPM stock that fetched only €24.57 on Friday. Timber!
These plunging share prices hit me hard. Not least because Bavarian pays no income to soften the blow but also because UPM’s sweet 6 per cent dividend yield is soured by Scandinavian withholding taxes.
• Tips for new investors in a turbulent market
I remain hopeful that the return to popularity of international travel — including to places where some of the insects could kill you — might bring Bavarian’s vaccines back into favour. Similarly, while the science is beyond me, UPM’s biorefineries make wood-based diesel fuels and alternatives to oil-based plastics.
Neither business has made me any money yet, quite the opposite. But both are applying scientific research to solve real problems with deadly diseases and pollution. That’s an under-reported advantage of active stock selection. It encourages investors to take an interest in the commercial world around us; including on the other side of the Channel.