In the wake of Pierre et Vacances SA's (EPA:VAC) latest €49m market cap drop, hedge funds owners may be forced to take severe actions

Key Insights

• Given the large stake in the stock by institutions, Pierre et Vacances' stock price might be vulnerable to their trading decisions
• A total of 3 investors have a majority stake in the company with 56% ownership
• Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business

Every investor in Pierre et Vacances SA (EPA:VAC) should be aware of the most powerful shareholder groups. We can see that hedge funds own the lion's share in the company with 44% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, hedge funds investors endured the highest losses last week after market cap fell by €49m. The recent loss, which adds to a one-year loss of 14% for stockholders, may not sit well with this group of investors. Generally speaking, hedge funds are quite aggressively managed, and are usually looking to maximize short-term returns. And given they have significant interest in Pierre et Vacances, they have a lot of power, and if the company's performance doesn't improve, it could lead to them influencing management decisions that aren't in line with long-term objectives.

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

View our latest analysis for Pierre et Vacances

What Does The Institutional Ownership Tell Us About Pierre et Vacances?

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 Pierre et Vacances 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. 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 Pierre et Vacances' earnings history below. Of course, the future is what really matters.

It looks like hedge funds own 44% of Pierre et Vacances shares. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Fidera Limited is currently the company's largest shareholder with 24% of shares outstanding. For context, the second largest shareholder holds about 20% of the shares outstanding, followed by an ownership of 12% by the third-largest shareholder.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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 Pierre et Vacances

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our data suggests that insiders own under 1% of Pierre et Vacances SA in their own names. However, it's possible that insiders might have an indirect interest through a more complex structure. It has a market capitalization of just €676m, and the board has only €1.8m worth of shares in their own names. Many investors in smaller companies prefer to see the board more heavily invested. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 14% 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 Company Ownership

We can see that Private Companies own 21%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Pierre et Vacances is showing 1 warning sign in our investment analysis , you should know about...

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.

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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.