While institutions invested in Petrofac Limited (LON:PFC) benefited from last week's 9.9% gain, individual investors stood to gain the most

By
Simply Wall St
Published
January 15, 2022
LSE:PFC
Source: Shutterstock

If you want to know who really controls Petrofac Limited (LON:PFC), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 46% to be precise, is individual investors. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Individual investors gained the most after market cap touched UK£736m last week, while institutions who own 36% also benefitted.

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

View our latest analysis for Petrofac

ownership-breakdown
LSE:PFC Ownership Breakdown January 15th 2022

What Does The Institutional Ownership Tell Us About Petrofac?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

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

earnings-and-revenue-growth
LSE:PFC Earnings and Revenue Growth January 15th 2022

Petrofac is not owned by hedge funds. Ayman Asfari is currently the company's largest shareholder with 17% of shares outstanding. For context, the second largest shareholder holds about 17% of the shares outstanding, followed by an ownership of 3.4% by the third-largest shareholder.

We did some more digging and found that 10 of the top shareholders account for roughly 50% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Petrofac

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 most recent data indicates that insiders own a reasonable proportion of Petrofac Limited. Insiders own UK£130m worth of shares in the UK£736m company. That's quite meaningful. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 46% stake in the company, and hence can't easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Petrofac better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Petrofac 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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