Following a 12% decline over last year, recent gains may please Calfrac Well Services Ltd. (TSE:CFW) institutional owners

Key Insights

• Given the large stake in the stock by institutions, Calfrac Well Services' stock price might be vulnerable to their trading decisions
• 50% of the business is held by the top 3 shareholders
• Insiders have been buying lately

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If you want to know who really controls Calfrac Well Services Ltd. (TSE:CFW), then you'll have to look at the makeup of its share registry. We can see that institutions own the lion's share in the company with 46% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Last week's CA$30m market cap gain would probably be appreciated by institutional investors, especially after a year of 12% losses.

Let's delve deeper into each type of owner of Calfrac Well Services, beginning with the chart below.

View our latest analysis for Calfrac Well Services

What Does The Institutional Ownership Tell Us About Calfrac Well Services?

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.

As you can see, institutional investors have a fair amount of stake in Calfrac Well Services. 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. 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 Calfrac Well Services' historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Calfrac Well Services. The company's largest shareholder is G2s2 Capital Inc., with ownership of 34%. For context, the second largest shareholder holds about 10% of the shares outstanding, followed by an ownership of 6.2% by the third-largest shareholder. Interestingly, the bottom two of the top three shareholders also hold the title of Top Key Executive and Lead Director, respectively, suggesting that these insiders have a personal stake in the company.

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.

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 is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Calfrac Well Services

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.

It seems insiders own a significant proportion of Calfrac Well Services Ltd.. It has a market capitalization of just CA$286m, and insiders have CA$50m 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-- including retail investors -- own 37% stake in the company, and hence can't easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Calfrac Well Services better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Calfrac Well Services you should be aware of, and 1 of them can't be ignored.

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.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.