X-FAB Silicon Foundries SE's (EPA:XFAB) market cap dropped €73m 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
• Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company

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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 following last week's 7.8% decline in share price, private companies suffered the most losses.

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

See 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.

As you can see, institutional investors have a fair amount of stake in X-FAB Silicon Foundries. 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. Elex N.V. is currently the largest shareholder, with 25% of shares outstanding. In comparison, the second and third largest shareholders hold about 25% and 11% of the stock.

A more detailed study of the shareholder registry showed us that 3 of the top shareholders have a considerable amount of ownership in the company, via their 61% stake.

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 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.

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.

We note our data does not show any board members holding shares, personally. Given we are not picking up on insider ownership, we may have missing data. Therefore, it would be interesting to assess the CEO compensation and tenure, here.

General Public Ownership

The general public, who are usually individual investors, hold a 29% stake in X-FAB Silicon Foundries. 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 25%, private equity firms could influence the X-FAB Silicon Foundries 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.

Private Company Ownership

Our data indicates that Private Companies hold 36%, of the company's shares. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should learn about the 2 warning signs we've spotted with X-FAB Silicon Foundries (including 1 which can't be ignored) .

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.

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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.