Institutional shareholders may be less affected by Temenos AG's (VTX:TEMN) pullback last week after a year of 7.8% returns

By
Simply Wall St
Published
November 28, 2021
SWX:TEMN
Source: Shutterstock

Every investor in Temenos AG (VTX:TEMN) should be aware of the most powerful shareholder groups. We can see that institutions own the lion's share in the company with 57% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

No shareholder likes losing money on their investments, especially institutional investors who saw their holdings drop 7.8% in value last week. However, the 7.8% one-year return to shareholders might have softened the blow. But they would probably be wary of future losses.

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

View our latest analysis for Temenos

ownership-breakdown
SWX:TEMN Ownership Breakdown November 29th 2021

What Does The Institutional Ownership Tell Us About Temenos?

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.

We can see that Temenos does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Temenos' earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
SWX:TEMN Earnings and Revenue Growth November 29th 2021

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. We note that hedge funds don't have a meaningful investment in Temenos. The company's largest shareholder is BNP Paribas, Private & Investment Banking Investments, with ownership of 9.5%. The second and third largest shareholders are Rosmarie Ebner and Martin Ebner, with an equal amount of shares to their name at 5.4%.

Looking at the shareholder registry, we can see that 51% of the ownership is controlled by the top 14 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 Temenos

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.

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 a reasonable proportion of Temenos AG. It is very interesting to see that insiders have a meaningful CHF1.1b stake in this CHF8.8b business. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

The general public-- including retail investors -- own 31% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Temenos you should know about.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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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