Could The Seplat Petroleum Development Company Plc (LON:SEPL) Ownership Structure Tell Us Something Useful?

By
Simply Wall St
Published
September 28, 2021
LSE:SEPL
Source: Shutterstock

A look at the shareholders of Seplat Petroleum Development Company Plc (LON:SEPL) 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. Companies that have been privatized tend to have low insider ownership.

Seplat Petroleum Development is a smaller company with a market capitalization of UK£532m, so it may still be flying under the radar of many institutional investors. Taking a look at our data on the ownership groups (below), it seems that institutional investors have bought into the company. Let's take a closer look to see what the different types of shareholders can tell us about Seplat Petroleum Development.

Check out our latest analysis for Seplat Petroleum Development

ownership-breakdown
LSE:SEPL Ownership Breakdown September 29th 2021

What Does The Institutional Ownership Tell Us About Seplat Petroleum Development?

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.

As you can see, institutional investors have a fair amount of stake in Seplat Petroleum Development. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Seplat Petroleum Development's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
LSE:SEPL Earnings and Revenue Growth September 29th 2021

It would appear that 5.7% of Seplat Petroleum Development shares are controlled by hedge funds. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. Looking at our data, we can see that the largest shareholder is PT Pertamina (Persero) with 20% of shares outstanding. For context, the second largest shareholder holds about 14% of the shares outstanding, followed by an ownership of 7.5% by the third-largest shareholder.

On looking further, we found that 56% of the shares are owned by the top 5 shareholders. In other words, these shareholders have a meaningful say in 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. 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 Seplat Petroleum Development

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.

We can see that insiders own shares in Seplat Petroleum Development Company Plc. As individuals, the insiders collectively own UK£15m worth of the UK£532m company. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public holds a 31% stake in Seplat Petroleum Development. 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.

Private Company Ownership

We can see that Private Companies own 49%, of the shares on issue. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Seplat Petroleum Development better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Seplat Petroleum Development you should be aware of, and 1 of them is a bit concerning.

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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