Stock Analysis

Oil Refineries Ltd.'s (TLV:ORL) stock price dropped 5.3% last week; private companies would not be happy

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TASE:ORL
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Every investor in Oil Refineries Ltd. (TLV:ORL) should be aware of the most powerful shareholder groups. We can see that private companies own the lion's share in the company with 32% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And last week, private companies endured the biggest losses as the stock fell by 5.3%.

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

However if you'd rather see where the opportunities and risks are within ORL's industry, you can check out our analysis on the IL Oil and Gas industry.

ownership-breakdown
TASE:ORL Ownership Breakdown October 3rd 2022

What Does The Institutional Ownership Tell Us About Oil Refineries?

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 Oil Refineries. 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. 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 Oil Refineries, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
TASE:ORL Earnings and Revenue Growth October 3rd 2022

We note that hedge funds don't have a meaningful investment in Oil Refineries. Looking at our data, we can see that the largest shareholder is Alverstone Ltd with 32% of shares outstanding. With 17% and 7.3% of the shares outstanding respectively, Hagag Group Real Estate Entrepreneurship Ltd and Israel Corporation Ltd are the second and third largest shareholders.

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 56% stake.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Oil Refineries

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.

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.

Our data suggests that insiders own under 1% of Oil Refineries Ltd. in their own names. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. It is a pretty big company, so it would be possible for board members to own a meaningful interest in the company, without owning much of a proportional interest. In this case, they own around ₪804k worth of shares (at current prices). It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 26% stake in Oil Refineries. 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

It seems that Private Companies own 32%, of the Oil Refineries stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Public Company Ownership

We can see that public companies hold 24% of the Oil Refineries shares on issue. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

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. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Oil Refineries (at least 1 which can't be ignored) , and understanding them should be part of your investment process.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.

Valuation is complex, but we're helping make it simple.

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About TASE:ORL

Oil Refineries

Oil Refineries Ltd., together with its subsidiaries, produces and sells crude oil products in Israel and internationally.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation4
Future Growth0
Past Performance5
Financial Health5
Dividends3

Read more about these checks in the individual report sections or in our analysis model.

Excellent balance sheet with solid track record.