Neoen S.A.'s (EPA:NEOEN) market cap touched €4.3b last week, benefiting both private companies who own 42% as well as institutions

Simply Wall St · 09/15/2023 05:41

Key Insights

  • The considerable ownership by private companies in Neoen indicates that they collectively have a greater say in management and business strategy
  • The top 3 shareholders own 52% of the company
  • Institutions own 30% of Neoen

A look at the shareholders of Neoen S.A. (EPA:NEOEN) can tell us which group is most powerful. The group holding the most number of shares in the company, around 42% to be precise, is private companies. Put another way, the group faces the maximum upside potential (or downside risk).

While private companies were the group that reaped the most benefits after last week’s 3.1% price gain, institutions also received a 30% cut.

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

Check out our latest analysis for Neoen

ownership-breakdown
ENXTPA:NEOEN Ownership Breakdown September 15th 2023

What Does The Institutional Ownership Tell Us About Neoen?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

Neoen already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Neoen's historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
ENXTPA:NEOEN Earnings and Revenue Growth September 15th 2023

We note that hedge funds don't have a meaningful investment in Neoen. The company's largest shareholder is Impala SAS, with ownership of 42%. Meanwhile, the second and third largest shareholders, hold 6.1% and 4.4%, of the shares outstanding, respectively. Furthermore, CEO Xavier Barbaro is the owner of 1.4% of the company's shares.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Neoen

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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 most recent data indicates that insiders own some shares in Neoen S.A.. The insiders have a meaningful stake worth €59m. Most would see this as a real positive. Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 27% stake in Neoen. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

It seems that Private Companies own 42%, of the Neoen stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should learn about the 2 warning signs we've spotted with Neoen (including 1 which can't be ignored) .

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.