Could The Ensign Energy Services Inc. (TSE:ESI) Ownership Structure Tell Us Something Useful?

If you want to know who really controls Ensign Energy Services Inc. (TSE:ESI), then you’ll have to look at the makeup of its share registry. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. I quite like to see at least a little bit of insider ownership. As Charlie Munger said ‘Show me the incentive and I will show you the outcome.

Ensign Energy Services is not a large company by global standards. It has a market capitalization of CA$49m, which means it wouldn’t have the attention of many institutional investors. In the chart below, we can see that institutional investors have bought into the company. Let’s take a closer look to see what the different types of shareholder can tell us about Ensign Energy Services.

Check out our latest analysis for Ensign Energy Services

TSX:ESI Ownership Summary, March 19th 2020
TSX:ESI Ownership Summary, March 19th 2020

What Does The Institutional Ownership Tell Us About Ensign Energy Services?

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.

We can see that Ensign Energy Services does have institutional investors; and they hold 42% of the stock. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Ensign Energy Services, (below). Of course, keep in mind that there are other factors to consider, too.

TSX:ESI Income Statement, March 19th 2020
TSX:ESI Income Statement, March 19th 2020

Ensign Energy Services is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Norman Edwards with 18% of shares outstanding. The second and third largest shareholders are Burgundy Asset Management Ltd. and Foyston, Gordon & Payne Inc., holding 12% and 9.6%, respectively.

On further inspection, we found that 51% of the share register is owned by the top 6 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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 Ensign Energy Services

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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 most recent data indicates that insiders own a reasonable proportion of Ensign Energy Services Inc.. Insiders have a CA$9.6m stake in this CA$49m business. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

With a 38% ownership, the general public have some degree of sway over ESI. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Next Steps:

It’s always worth thinking about the different groups who own shares in a company. But to understand Ensign Energy Services better, we need to consider many other factors. Case in point: We’ve spotted 4 warning signs for Ensign Energy Services you should be aware of, and 1 of them can’t be ignored.

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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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