X-FAB Silicon Foundries SE's (EPA:XFAB) market cap dropped €71m last week; Private companies bore the brunt

Key Insights

• The considerable ownership by private companies in X-FAB Silicon Foundries indicates that they collectively have a greater say in management and business strategy
• The top 3 shareholders own 61% of the company
• Institutional ownership in X-FAB Silicon Foundries is 12%

Every investor in X-FAB Silicon Foundries SE (EPA:XFAB) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are private companies with 36% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And last week, private companies endured the biggest losses as the stock fell by 11%.

Let's delve deeper into each type of owner of X-FAB Silicon Foundries, beginning with the chart below.

View our latest analysis for X-FAB Silicon Foundries

What Does The Institutional Ownership Tell Us About X-FAB Silicon Foundries?

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 X-FAB Silicon Foundries does have institutional investors; and they hold a good portion of the company's stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 X-FAB Silicon Foundries, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in X-FAB Silicon Foundries. The company's largest shareholder is Elex N.V., with ownership of 25%. For context, the second largest shareholder holds about 24% of the shares outstanding, followed by an ownership of 11% by the third-largest shareholder.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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 X-FAB Silicon Foundries

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.

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 cannot confirm that board members are holding shares personally. It is unusual not to have at least some personal holdings by board members, so our data might be flawed. A good next step would be to check how much the CEO is paid.

General Public Ownership

The general public, who are usually individual investors, hold a 27% stake in X-FAB Silicon Foundries. 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 24%, private equity firms could influence the X-FAB Silicon Foundries board. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Private Company Ownership

We can see that Private Companies own 36%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

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. For example, we've discovered 2 warning signs for X-FAB Silicon Foundries (1 shouldn't be ignored!) that you should be aware of before investing here.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.