Life in the stock market part 6 – Depression has taken over the small-cap list, but a turn could be around the corner
Summary
- Inderes faced liquidity challenges post-listing, with an oversubscribed IPO and limited trading volume, but these issues have since resolved as the ownership base renewed itself.
- Nasdaq's First North list, despite recent poor performance, has historically provided strong returns and improved liquidity, with significant private investor participation.
- Small-cap stocks are currently experiencing a downturn, with funds withdrawing investments, but strategies like share buybacks and targeting retail investors could help companies recover.
- The author remains optimistic about small caps, investing heavily in them, and believes that improving earnings will eventually reverse the current negative sentiment.
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Automatic translation: Originally published in Finnish 04/10/2026, 06:00 GMT. Give feedback here.
The blog series discusses life on the stock exchange from the company's perspective
Following Inderes' listing, I received constant negative feedback about the weak liquidity of our share. There was a queue of people interested in the company, but the stock's daily trading volume of a few thousand euros on the exchange was an obstacle for everyone. Even during the IPO, no investor was able to take a sensible holding in the share, as the EUR 5.7 million initial public offering was oversubscribed by more than 8 times in just over 20 hours. There was no institutional offering, so even the largest new owners received at most a few thousand euros worth of shares.
Some demanded that solving the liquidity problem should now be the CEO's top priority. I was more interested in building the business, and at that time I didn't see a sensible link in the operations to advancing the strategy. And to be honest, I didn't even know how the issue could be resolved in a situation where the vast majority of the ownership base is locked up.
I noted that time would certainly fix the issue when looking at our ownership structure. And that is ultimately what happened, perhaps a little too well.
This week, Stockholm hosted Nasdaq's First North Day, celebrating the 20-year history of the First North growth company list. Inderes was pleased to be a partner at the event. After the depression hangover of recent years, even I was somewhat surprised by Nasdaq's presentation pointing out that, in the long term, First North has performed quite well, although the index's return figures are dampened by companies moving to the main list (meaning that the top-performing shares jump from the index to the main list, while the moerning ones stay behind).
Nasdaq has many other reasons to celebrate the Nordic First North. Throughout its history, 561 companies have been listed on it, 32 BSEK in capital has been raised, and 150 companies have transferred to the main list. It has clearly outperformed the growth company lists on other European stock exchanges. Sweden is the admired star of the European capital market, but Finland does not need to be ashamed in the comparison either. On First North lists, as much as 40% of the daily trading volume of shares comes from private investors, meaning the list has enabled the general public to access earlier-stage growth companies. First North's liquidity has clearly picked up from its 2025 lows, which is a good sign. There have also been more IPO news in recent weeks in both Helsinki and Stockholm.
The present still feels depressingly bleak from the perspective of both the companies on the list and the investors. First North Helsinki is once again breaking all-time lows, and it does not look any better in Stockholm. The five-year return is -69%. Incidentally, Inderes is celebrating its five-year anniversary on the First North list at the exact same time. The peak of the index coincided almost with the listing date.
One reason for the hangover is that money continues to flee en masse from small-cap funds, as professor of finance Vesa Puttonen writes in Sijoitustieto. When thinly traded shares are sold under compulsion, it leaves an ugly mark on share prices unless the company's earnings are in a steep upward trajectory. A Stockholm-based banker half-laughed to me that First North companies' earnings releases and news are "mere liquidity windows where these fleeing owners get to sell the share." That is well said. In the case of good news, only the share's trading volume rises, and the price remains stagnant.
Puttonen notes that small companies should not expect equity funds to act as investors. If a small-cap fund is currently on the shareholder list, it is likely to be on the selling side rather than buying.
On the Helsinki small-cap list, you can find CEOs who are tearing their hair out over this, says a professional board member I know. If your company happens to be pigeonholed in the market into a loser category that investors are currently shunning, there is little you can do about it. Spending time on investor relations targeting a fund segment that is selling anyway may be a waste of time.
Something can still be done, however, if your patience holds out. My own tips for a fix-it kit are as follows:
- Share buybacks should be a given. For some reason, the boards of many small companies hesitate to do this.
- Focus on retail investors. The sentiment there is also poor, but the first seasoned cigar butt pickers are already on the move.
- Brainstorm new themes or angles for the investment story to generate interest and position the company in a growth category.
- Delivering strong figures is ultimately the surest way to capture investor interest, even though that too takes time. A few good quarters are not enough.
- Be patient. Cyclicality is part of life in the capital markets.
- Don't blame the "stock exchange", it solves nothing.
Inderes' early-stage liquidity problem was resolved in the turmoil as our previously fragmented ownership base began to renew itself. We are one of the most liquid shares on the small-cap list. At best, one percent of the ownership changes hands in the space of a week. If someone wanted to join the ranks of the largest shareholders, it wouldn't take many months at the current trading volume. However, arousing investor interest feels harder than ever, and many companies share the challenge. To my delight, I have noticed that new investors have begun to appear on the shareholder list. And Inderes itself has climbed to the top of the shareholder list through its share buyback program.
As an investor, I try to avoid hype trends and rummage through the trash. I love investing in themes that depression has taken over. I am excited about First North and small caps precisely because the sentiment is so sour, even though as a CEO it sometimes feels heavy. From my portfolio, I have sold all sellable shares of larger companies and invested everything in small caps (and of course Inderes' share). If the basics of financial theory that I once learned in Professor Puttonen's lectures still hold true at all today, the current hangover cannot go on indefinitely if the earnings of small companies develop in the right direction at all.
Perhaps something of the flattening atmosphere of our time is also told by the fact that someone managed to craft a mocking headline out of a CEO's massive investment in their own company. Sentiment can't get any worse than this, can it?
Previous parts of the blog:
Life on the stock exchange – Part 3 | I was wrong! Share sales in an IPO are not a sin after all
Life on the stock exchange – Part 5 | Community Adjusted EBITDA
