Ecoppia Scientific Ltd's (TLV:ECPA) last week's 11% decline must have disappointed private companies who have a significant stake

By
Simply Wall St
Published
January 10, 2022
TASE:ECPA
Source: Shutterstock

To get a sense of who is truly in control of Ecoppia Scientific Ltd (TLV:ECPA), it is important to understand the ownership structure of the business. With 39% stake, private companies possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While insiders, who own 23% shares weren’t spared from last week’s ₪42m market cap drop, private companies as a group suffered the maximum losses

In the chart below, we zoom in on the different ownership groups of Ecoppia Scientific.

Check out our latest analysis for Ecoppia Scientific

ownership-breakdown
TASE:ECPA Ownership Breakdown January 10th 2022

What Does The Institutional Ownership Tell Us About Ecoppia Scientific?

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.

We can see that Ecoppia Scientific does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Ecoppia Scientific's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
TASE:ECPA Earnings and Revenue Growth January 10th 2022

Hedge funds don't have many shares in Ecoppia Scientific. Cim Ecoppia Investor L.P is currently the company's largest shareholder with 27% of shares outstanding. With 12% and 12% of the shares outstanding respectively, Swarth Group Ltd and Harel Insurance Investments and Finances Services Ltd, Asset Management Arm are the second and third largest shareholders.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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 Ecoppia Scientific

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our most recent data indicates that insiders own a reasonable proportion of Ecoppia Scientific Ltd. Insiders have a ₪76m stake in this ₪326m business. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 19% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

It seems that Private Companies own 39%, of the Ecoppia Scientific stock. 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:

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 4 warning signs we've spotted with Ecoppia Scientific (including 1 which makes us a bit uncomfortable) .

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.

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