AB Electrolux (publ) (STO:ELUX B) surges 5.6%; individual investors who own 49% shares profited along with institutions
Key Insights
- The considerable ownership by individual investors in AB Electrolux indicates that they collectively have a greater say in management and business strategy
- The top 12 shareholders own 51% of the company
- Insiders have been buying lately
To get a sense of who is truly in control of AB Electrolux (publ) (STO:ELUX B), it is important to understand the ownership structure of the business. We can see that individual investors own the lion's share in the company with 49% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
Individual investors gained the most after market cap touched kr17b last week, while institutions who own 33% also benefitted.
In the chart below, we zoom in on the different ownership groups of AB Electrolux.
See our latest analysis for AB Electrolux
What Does The Institutional Ownership Tell Us About AB Electrolux?
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.
As you can see, institutional investors have a fair amount of stake in AB Electrolux. 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 AB Electrolux's historic earnings and revenue below, but keep in mind there's always more to the story.
We note that hedge funds don't have a meaningful investment in AB Electrolux. Our data shows that Investor AB (publ) is the largest shareholder with 19% of shares outstanding. In comparison, the second and third largest shareholders hold about 6.7% and 6.0% of the stock.
After doing some more digging, we found that the top 12 have the combined ownership of 51% in the company, suggesting that no single shareholder has significant control over the company.
While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. 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 AB Electrolux
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.
I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.
Our data suggests that insiders own under 1% of AB Electrolux (publ) in their own names. Keep in mind that it's a big company, and the insiders own kr17m worth of shares. The absolute value might be more important than the proportional share. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.
General Public Ownership
The general public, who are usually individual investors, hold a 49% stake in AB Electrolux. 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.
Private Equity Ownership
With an ownership of 19%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand AB Electrolux better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for AB Electrolux you should be aware of.
But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.
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.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.