Is AFC Energy plc (LON:AFC) Popular Amongst Institutions?

By
Simply Wall St
Published
April 27, 2021
AIM:AFC
Source: Shutterstock

A look at the shareholders of AFC Energy plc (LON:AFC) can tell us which group is most powerful. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. We also tend to see lower insider ownership in companies that were previously publicly owned.

AFC Energy is not a large company by global standards. It has a market capitalization of UK£507m, which means it wouldn't have the attention of many institutional investors. Taking a look at our data on the ownership groups (below), it seems that institutions own shares in the company. Let's delve deeper into each type of owner, to discover more about AFC Energy.

See our latest analysis for AFC Energy

ownership-breakdown
AIM:AFC Ownership Breakdown April 28th 2021

What Does The Institutional Ownership Tell Us About AFC Energy?

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.

We can see that AFC Energy 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 AFC Energy, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
AIM:AFC Earnings and Revenue Growth April 28th 2021

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. We note that hedge funds don't have a meaningful investment in AFC Energy. Looking at our data, we can see that the largest shareholder is HSBC Global Asset Management (UK) Limited with 5.6% of shares outstanding. With 5.3% and 4.0% of the shares outstanding respectively, HBOS Investment Fund Managers Limited and Barclays Bank PLC, Wealth and Investment Management Division are the second and third largest shareholders.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of AFC Energy

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.

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.

Our data suggests that insiders own under 1% of AFC Energy plc in their own names. It seems the board members have no more than UK£2.7m worth of shares in the UK£507m company. I generally like to see a board more invested. However it might be worth checking if those insiders have been buying.

General Public Ownership

With a 41% ownership, the general public have some degree of sway over AFC Energy. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand AFC Energy better, we need to consider many other factors. To that end, you should learn about the 4 warning signs we've spotted with AFC Energy (including 2 which can't be ignored) .

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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This article by Simply Wall St is general in nature. 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.
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