Painful week for individual investors invested in Electro Optic Systems Holdings Limited (ASX:EOS) after 11% drop, institutions also suffered losses

By
Simply Wall St
Published
November 30, 2021
ASX:EOS
Source: Shutterstock

If you want to know who really controls Electro Optic Systems Holdings Limited (ASX:EOS), then you'll have to look at the makeup of its share registry. We can see that individual investors own the lion's share in the company with 58% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While institutions who own 17% came under pressure after market cap dropped to AU$388m last week,individual investors took the most losses.

In the chart below, we zoom in on the different ownership groups of Electro Optic Systems Holdings.

See our latest analysis for Electro Optic Systems Holdings

ownership-breakdown
ASX:EOS Ownership Breakdown November 30th 2021

What Does The Institutional Ownership Tell Us About Electro Optic Systems Holdings?

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 Electro Optic Systems Holdings 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. 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 Electro Optic Systems Holdings, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
ASX:EOS Earnings and Revenue Growth November 30th 2021

Electro Optic Systems Holdings is not owned by hedge funds. With a 5.3% stake, CEO Ben Greene is the largest shareholder. Meanwhile, the second and third largest shareholders, hold 4.7% and 4.6%, of the shares outstanding, respectively.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Electro Optic Systems Holdings

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

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.

It seems insiders own a significant proportion of Electro Optic Systems Holdings Limited. It has a market capitalization of just AU$388m, and insiders have AU$48m worth of shares in their own names. 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

The general public, who are usually individual investors, hold a substantial 58% stake in Electro Optic Systems Holdings, suggesting it is a fairly popular stock. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Private Company Ownership

It seems that Private Companies own 3.3%, of the Electro Optic Systems Holdings stock. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Public Company Ownership

We can see that public companies hold 4.6% of the Electro Optic Systems Holdings shares on issue. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

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. Case in point: We've spotted 2 warning signs for Electro Optic Systems Holdings you should be aware of.

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.

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