With 63% ownership in Mips AB (publ) (STO:MIPS), institutional investors have a lot riding on the business

Simply Wall St · 10/18 06:36

Key Insights

  • Significantly high institutional ownership implies Mips' stock price is sensitive to their trading actions
  • A total of 17 investors have a majority stake in the company with 51% ownership
  • Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock

To get a sense of who is truly in control of Mips AB (publ) (STO:MIPS), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are institutions with 63% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And last week, institutional investors ended up benefitting the most after the company hit kr14b in market cap. One-year return to shareholders is currently 63% and last week’s gain was the icing on the cake.

Let's take a closer look to see what the different types of shareholders can tell us about Mips.

See our latest analysis for Mips

ownership-breakdown
OM:MIPS Ownership Breakdown October 18th 2024

What Does The Institutional Ownership Tell Us About Mips?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

We can see that Mips does have institutional investors; and they hold a good portion of the company's stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Mips' historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
OM:MIPS Earnings and Revenue Growth October 18th 2024

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Mips is not owned by hedge funds. Handelsbanken Asset Management is currently the company's largest shareholder with 5.1% of shares outstanding. The second and third largest shareholders are Baillie Gifford & Co. and Swedbank Robur Fonder AB, with an equal amount of shares to their name at 4.9%.

Looking at the shareholder registry, we can see that 51% of the ownership is controlled by the top 17 shareholders, meaning that no single shareholder has a majority interest in the ownership.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Mips

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our information suggests that Mips AB (publ) insiders own under 1% of the company. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own -kr31m worth of shares. Arguably, recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

With a 37% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Mips. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. For example, we've discovered 1 warning sign for Mips that you should be aware of before investing here.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.