Ballard Power Systems Inc.'s (TSE:BLDP) recent 4.4% pullback adds to one-year year losses, institutional owners may take drastic measures

By
Simply Wall St
Published
April 16, 2022
TSX:BLDP
Source: Shutterstock

A look at the shareholders of Ballard Power Systems Inc. (TSE:BLDP) can tell us which group is most powerful. With 42% stake, institutions possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

And so it follows that institutional investors was the group most impacted after the company's market cap fell to CA$3.8b last week after a 4.4% drop in the share price. This set of investors may especially be concerned about the current loss, which adds to a one-year loss of 52% for shareholders. Also referred to as "smart money", institutions have a lot of sway over how a stock's price moves. As a result, if the downtrend continues, institutions may face pressures to sell Ballard Power Systems, which might have negative implications on individual investors.

Let's delve deeper into each type of owner of Ballard Power Systems, beginning with the chart below.

Check out our latest analysis for Ballard Power Systems

ownership-breakdown
TSX:BLDP Ownership Breakdown April 16th 2022

What Does The Institutional Ownership Tell Us About Ballard Power Systems?

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.

Ballard Power Systems already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Ballard Power Systems' earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
TSX:BLDP Earnings and Revenue Growth April 16th 2022

We note that hedge funds don't have a meaningful investment in Ballard Power Systems. The company's largest shareholder is Weichai Power Co., Ltd., with ownership of 15%. Meanwhile, the second and third largest shareholders, hold 8.5% and 3.4%, 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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Ballard Power Systems

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 less than 1% of Ballard Power Systems Inc.. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own CA$7.8m worth of shares. Arguably, recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 39% stake in the company, and hence can't easily be ignored. 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.

Public Company Ownership

It appears to us that public companies own 19% of Ballard Power Systems. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Ballard Power Systems better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Ballard Power Systems .

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

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.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.