Ratti S.p.A. (BIT:RAT) insiders have had a fantastic week as stock increased 13%, and they haven't stopped buying

By
Simply Wall St
Published
February 16, 2022
BIT:RAT
Source: Shutterstock

To get a sense of who is truly in control of Ratti S.p.A. (BIT:RAT), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual insiders with 50% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Having purchased shares recently, insiders must be glad after market cap hit €101m last week.

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

Check out our latest analysis for Ratti

ownership-breakdown
BIT:RAT Ownership Breakdown February 16th 2022

What Does The Lack Of Institutional Ownership Tell Us About Ratti?

We don't tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it's not particularly common.

There are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. On the other hand, it's always possible that professional investors are avoiding a company because they don't think it's the best place for their money. Ratti's earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.

earnings-and-revenue-growth
BIT:RAT Earnings and Revenue Growth February 16th 2022

We note that hedge funds don't have a meaningful investment in Ratti. The company's largest shareholder is Antonio Favrin, with ownership of 34%. With 33% and 17% of the shares outstanding respectively, Wizard S.r.l. and Donatella Ratti are the second and third largest shareholders. Donatella Ratti, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 67% stake.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Ratti

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.

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.

It seems that insiders own more than half the Ratti S.p.A. stock. This gives them a lot of power. That means they own €50m worth of shares in the €101m 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 16% 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.

Private Company Ownership

It seems that Private Companies own 33%, of the Ratti stock. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Ratti better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Ratti you should be aware of.

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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