Stock Analysis

Here's What West Fraser Timber Co. Ltd.'s (TSE:WFT) Shareholder Ownership Structure Looks Like

  •  Updated
TSX:WFG
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A look at the shareholders of West Fraser Timber Co. Ltd. (TSE:WFT) can tell us which group is most powerful. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies. Companies that used to be publicly owned tend to have lower insider ownership.

West Fraser Timber has a market capitalization of CA$5.7b, so it's too big to fly under the radar. We'd expect to see both institutions and retail investors owning a portion of the company. Our analysis of the ownership of the company, below, shows that institutions own shares in the company. Let's take a closer look to see what the different types of shareholders can tell us about West Fraser Timber.

See our latest analysis for West Fraser Timber

ownership-breakdown
TSX:WFT Ownership Breakdown December 10th 2020

What Does The Institutional Ownership Tell Us About West Fraser Timber?

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.

We can see that West Fraser Timber 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 West Fraser Timber, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
TSX:WFT Earnings and Revenue Growth December 10th 2020

Hedge funds don't have many shares in West Fraser Timber. The Jim Pattison Group, Inc. is currently the company's largest shareholder with 13% of shares outstanding. With 11% and 4.5% of the shares outstanding respectively, Ketcham Investments Inc. and Norges Bank Investment Management are the second and third largest shareholders.

Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 13 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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 West Fraser Timber

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our most recent data indicates that insiders own some shares in West Fraser Timber Co. Ltd.. The insiders have a meaningful stake worth CA$124m. Most would see this as a real positive. It is good to see this level of investment by insiders. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, with a 40% stake in the company, will not 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.

Private Company Ownership

Our data indicates that Private Companies hold 25%, of the company's shares. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand West Fraser Timber better, we need to consider many other factors. Take risks for example - West Fraser Timber has 2 warning signs (and 1 which can't be ignored) we think you should know about.

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.

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