Stock Analysis

Novozymes A/S' (CPH:NZYM B) 3.5% loss last week hit both individual investors who own 39% as well as institutions

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CPSE:NSIS B
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Key Insights

  • Significant control over Novozymes by individual investors implies that the general public has more power to influence management and governance-related decisions
  • The top 19 shareholders own 50% of the company
  • Institutions own 31% of Novozymes

Every investor in Novozymes A/S (CPH:NZYM B) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 39% 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 3.5% price drop, institutions with their 31% holdings also suffered.

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

View our latest analysis for Novozymes

ownership-breakdown
CPSE:NZYM B Ownership Breakdown May 31st 2023

What Does The Institutional Ownership Tell Us About Novozymes?

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 Novozymes does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Novozymes, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
CPSE:NZYM B Earnings and Revenue Growth May 31st 2023

Hedge funds don't have many shares in Novozymes. Novo Holdings A/S is currently the company's largest shareholder with 30% of shares outstanding. In comparison, the second and third largest shareholders hold about 2.6% and 2.3% of the stock.

Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 19 shareholders, meaning that no single shareholder has a majority interest in the ownership.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Novozymes

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 less than 1% of Novozymes A/S. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own kr.6.5m of stock. 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.

Private Equity Ownership

With a stake of 30%, private equity firms could influence the Novozymes board. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. To that end, you should be aware of the 2 warning signs we've spotted with Novozymes .

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.

Valuation is complex, but we're helping make it simple.

Find out whether Novozymes is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.