Institutional owners may consider drastic measures as Marel hf’s recent Kr30 billion drop. (ICE: MAREL) adds to long-term losses

Each investor in Marel hf. (ICE:MAREL) should be aware of the most powerful shareholder groups. The group with the largest number of shares in the company, around 50% to be precise, are institutions. In other words, the group faces the maximum upside potential (or downside risk).

It follows that institutional investors were the hardest hit group after the company’s market capitalization fell to Kr488 billion last week following a 5.8% drop in the share price. This set of investors may particularly worry about the current loss, which is added to a loss over one year of 25% for shareholders. Often referred to as “market makers,” institutions wield significant power in influencing the price dynamics of any stock. Therefore, if the downtrend continues, institutions may come under pressure to sell Marel hf, which could negatively impact individual investors.

Let’s dive deeper into each Marel hf owner type, starting with the table below.

Discover our latest analysis for Marel hf

ICSE: Distribution of ownership of MAREL May 11, 2022

What does institutional ownership tell us about Marel hf?

Institutional investors typically compare their own returns to the returns of a commonly tracked index. They therefore generally consider buying larger companies that are included in the relevant benchmark.

We can see that Marel hf has institutional investors; and they own a good part of the shares of the company. This implies that analysts working for these institutions have reviewed the stock and like it. But like everyone else, they can be wrong. If multiple institutions change their minds on a stock at the same time, you could see the stock price drop quickly. So it’s worth taking a look at Marel hf’s earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
ICSE: MAREL Earnings and Revenue Growth May 11, 2022

Since institutional investors own more than half of the issued shares, the board will likely have to pay attention to their preferences. Marel hf does not belong to hedge funds. Looking at our data, we can see that the major shareholder is Eyrir Invest with 25% of the outstanding shares. For context, the second largest shareholder owns approximately 6.6% of the outstanding shares, followed by 5.0% ownership by the third largest shareholder.

Upon closer inspection, we found that more than half of the company’s shares are held by the top 7 shareholders, suggesting that the interests of the larger shareholders are to some extent balanced by those of the smaller ones.

While it makes sense to study data on a company’s institutional ownership, it also makes sense to study analyst sentiment to find out which way the wind is blowing. A number of analysts cover the stock, so you can look at growth forecasts quite easily.

Insider ownership of Marel hf

The definition of an insider may differ slightly from country to country, but board members still matter. The management of the company runs the company, but the CEO will answer to the board of directors, even if he is a member of it.

Most view insider ownership as a positive because it can indicate that the board is well aligned with other shareholders. However, there are times when too much power is concentrated within this group.

Our information suggests that Marel hf. insiders own less than 1% of the company. But they may have an indirect interest through a corporate structure that we have not noted. It’s a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case, insiders hold 1.8 billion Kr worth of shares. Arguably, recent purchases and sales are equally important to consider. You can click here to see if insiders have been buying or selling.

General public property

The general public, including retail investors, owns 23% of the company’s capital and therefore cannot be easily ignored. This size of ownership, although considerable, may not be sufficient to change company policy if the decision is not in line with other major shareholders.

Private equity ownership

With a 25% stake, private equity firms could influence Marel hf’s board of directors. Some investors might be encouraged by this, as private equity is sometimes able to encourage strategies that help the market see the value of the company. Alternatively, these holders could exit the investment after making it public.

Next steps:

I find it very interesting to see who exactly owns a company. But to really get insight, we also need to consider other information. For example, we have identified 1 warning sign for Marel hf of which you should be aware.

Ultimately the future is the most important. You can access this free analyst forecast report for the company.

NB: The figures in this article are calculated using trailing twelve month data, which refers to the 12 month period ending on the last day of the month the financial statements are dated. This may not be consistent with the annual report figures for the full year.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

About William G.

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