State or government invested in ACEA S.p.A. (BIT:ACE) copped the brunt of last week's €134m market cap decline

By
Simply Wall St
Published
April 18, 2022
BIT:ACE
Source: Shutterstock

To get a sense of who is truly in control of ACEA S.p.A. (BIT:ACE), it is important to understand the ownership structure of the business. We can see that state or government own the lion's share in the company with 51% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, state or government as a group endured the highest losses last week after market cap fell by €134m.

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

See our latest analysis for ACEA

ownership-breakdown
BIT:ACE Ownership Breakdown April 18th 2022

What Does The Institutional Ownership Tell Us About ACEA?

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 ACEA. 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 ACEA's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
BIT:ACE Earnings and Revenue Growth April 18th 2022

We note that hedge funds don't have a meaningful investment in ACEA. Looking at our data, we can see that the largest shareholder is ROMA with 51% of shares outstanding. This implies that they have majority interest control of the future of the company. For context, the second largest shareholder holds about 12% of the shares outstanding, followed by an ownership of 11% by the third-largest shareholder.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. 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 ACEA

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. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 most recent data indicates that insiders own some shares in ACEA S.p.A.. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around €109m worth of shares (at current prices). Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 13% stake in ACEA. 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

We can see that Private Companies own 26%, 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with ACEA (at least 1 which is potentially serious) , and understanding them should be part of your investment process.

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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