Institutional investors may adopt severe steps after Mersen S.A.'s (EPA:MRN) latest 8.3% drop adds to a year losses

Key Insights

• Institutions' substantial holdings in Mersen implies that they have significant influence over the company's share price
• A total of 25 investors have a majority stake in the company with 49% ownership
• Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company

A look at the shareholders of Mersen S.A. (EPA:MRN) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are institutions with 48% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And so it follows that institutional investors was the group most impacted after the company's market cap fell to €552m last week after a 8.3% drop in the share price. This set of investors may especially be concerned about the current loss, which adds to a one-year loss of 23% for shareholders. Institutions or "liquidity providers" control large sums of money and therefore, these types of investors usually have a lot of influence over stock price movements. As a result, if the decline continues, institutional investors may be pressured to sell Mersen which might hurt individual investors.

Let's take a closer look to see what the different types of shareholders can tell us about Mersen.

Check out our latest analysis for Mersen

What Does The Institutional Ownership Tell Us About Mersen?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

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

Hedge funds don't have many shares in Mersen. Looking at our data, we can see that the largest shareholder is Bpifrance Participations SA with 11% of shares outstanding. The second and third largest shareholders are Janus Henderson Group plc and Amiral Gestion, with an equal amount of shares to their name at 5.6%.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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 Mersen

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 data suggests that insiders own under 1% of Mersen S.A. in their own names. It appears that the board holds about €1.3m worth of stock. This compares to a market capitalization of €552m. Many tend to prefer to see a board with bigger shareholdings. A good next step might be to take a look at this free summary of insider buying and selling.

General Public Ownership

The general public-- including retail investors -- own 41% 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.

Private Equity Ownership

With a stake of 11%, private equity firms could influence the Mersen 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Mersen better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Mersen 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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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.