Vallourec S.A. (EPA:VK) stock most popular amongst individual investors who own 44%, while private equity firms hold 27%

By
Simply Wall St
Published
February 18, 2022
ENXTPA:VK
Source: Shutterstock

Every investor in Vallourec S.A. (EPA:VK) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 44% to be precise, is individual investors. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Meanwhile, private equity firms make up 27% of the company’s shareholders.

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

Check out our latest analysis for Vallourec

ownership-breakdown
ENXTPA:VK Ownership Breakdown February 18th 2022

What Does The Institutional Ownership Tell Us About Vallourec?

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.

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

earnings-and-revenue-growth
ENXTPA:VK Earnings and Revenue Growth February 18th 2022

It looks like hedge funds own 17% of Vallourec 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. Apollo Global Management, Inc. is currently the company's largest shareholder with 27% of shares outstanding. Strategic Value Partners, LLC is the second largest shareholder owning 12% of common stock, and Monarch Alternative Capital LP holds about 5.1% of the company stock.

We did some more digging and found that 6 of the top shareholders account for roughly 52% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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 Vallourec

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.

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 data suggests that insiders own under 1% of Vallourec S.A. in their own names. Keep in mind that it's a big company, and the insiders own €11k worth of shares. The absolute value might be more important than the proportional share. 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-- including retail investors -- own 44% 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 27%, private equity firms could influence the Vallourec 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.

Public Company Ownership

We can see that public companies hold 3.4% of the Vallourec shares on issue. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Vallourec , and understanding them should be part of your investment process.

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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