Innergex Renewable Energy Inc.'s (TSE:INE) market cap dropped CA$98m last week; individual investors who hold 40% were hit as were institutions

Key Insights

• The considerable ownership by individual investors in Innergex Renewable Energy indicates that they collectively have a greater say in management and business strategy
• The top 13 shareholders own 50% of the company
• Insiders have bought recently

Every investor in Innergex Renewable Energy Inc. (TSE:INE) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 40% to be precise, is individual investors. Put another way, the group faces the maximum upside potential (or downside risk).

While the holdings of individual investors took a hit after last week’s 5.6% price drop, institutions with their 39% holdings also suffered.

In the chart below, we zoom in on the different ownership groups of Innergex Renewable Energy.

See our latest analysis for Innergex Renewable Energy

What Does The Institutional Ownership Tell Us About Innergex Renewable Energy?

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.

Innergex Renewable Energy already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Innergex Renewable Energy, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Innergex Renewable Energy. Our data shows that Hydro-Québec is the largest shareholder with 20% of shares outstanding. Scotia Asset Management L.P. is the second largest shareholder owning 7.5% of common stock, and Caisse de dépôt et placement du Québec holds about 6.5% of the company stock. Additionally, the company's CEO Michel Letellier directly holds 0.5% of the total shares outstanding.

After doing some more digging, we found that the top 13 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

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 Innergex Renewable Energy

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.

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 information suggests that Innergex Renewable Energy Inc. insiders own under 1% of the company. However, it's possible that insiders might have an indirect interest through a more complex structure. 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$13m worth of shares. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 40% stake in Innergex Renewable Energy. 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

It seems that Private Companies own 20%, of the Innergex Renewable Energy 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Innergex Renewable Energy better, we need to consider many other factors. Be aware that Innergex Renewable Energy is showing 3 warning signs in our investment analysis , and 1 of those makes us a bit uncomfortable...

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.