Interparfums SA's (EPA:ITP) market cap dropped €121m last week; Public companies bore the brunt

Key Insights

• Significant control over Interparfums by public companies implies that the general public has more power to influence management and governance-related decisions
• 72% of the company is held by a single shareholder (Inter Parfums, Inc.)
• Institutions own 12% of Interparfums

Every investor in Interparfums SA (EPA:ITP) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 72% to be precise, is public companies. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And last week, public companies endured the biggest losses as the stock fell by 3.6%.

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

Check out our latest analysis for Interparfums

What Does The Institutional Ownership Tell Us About Interparfums?

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 Interparfums 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Interparfums' historic earnings and revenue below, but keep in mind there's always more to the story.

Interparfums is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Inter Parfums, Inc. with 72% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. Brown Capital Management, LLC is the second largest shareholder owning 2.4% of common stock, and Invesco Ltd. holds about 1.1% of the company stock.

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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Interparfums

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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 information suggests that Interparfums SA insiders own under 1% of the company. Keep in mind that it's a big company, and the insiders own €3.2m worth of shares. The absolute value might be more important than the proportional share. It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

With a 15% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Interparfums. 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.

Public Company Ownership

It appears to us that public companies own 72% of Interparfums. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

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 Interparfums 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.