Banca Monte dei Paschi di Siena S.p.A.'s (BIT:BMPS) market cap dropped €120m last week; State or government bore the brunt

Key Insights

• Significant control over Banca Monte dei Paschi di Siena by state or government implies that the general public has more power to influence management and governance-related decisions
• 64% of the company is held by a single shareholder (Ministero dell'Economia e delle Finanze)
• Institutional ownership in Banca Monte dei Paschi di Siena is 12%

Every investor in Banca Monte dei Paschi di Siena S.p.A. (BIT:BMPS) should be aware of the most powerful shareholder groups. We can see that state or government own the lion's share in the company with 64% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, state or government as a group endured the highest losses last week after market cap fell by €120m.

In the chart below, we zoom in on the different ownership groups of Banca Monte dei Paschi di Siena.

See our latest analysis for Banca Monte dei Paschi di Siena

What Does The Institutional Ownership Tell Us About Banca Monte dei Paschi di Siena?

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 Banca Monte dei Paschi di Siena 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 Banca Monte dei Paschi di Siena, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Banca Monte dei Paschi di Siena. Our data shows that Ministero dell'Economia e delle Finanze is the largest shareholder with 64% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. With 6.8% and 1.5% of the shares outstanding respectively, Allspring Global Investments, LLC and Pacific Investment Management Company LLC are the second and third largest shareholders.

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

Insider Ownership Of Banca Monte dei Paschi di Siena

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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 data cannot confirm that board members are holding shares personally. Given we are not picking up on insider ownership, we may have missing data. Therefore, it would be interesting to assess the CEO compensation and tenure, here.

General Public Ownership

The general public, who are usually individual investors, hold a 24% stake in Banca Monte dei Paschi di Siena. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Banca Monte dei Paschi di Siena is showing 4 warning signs in our investment analysis , and 2 of those are significant...

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.