Stock Analysis

Institutional owners may consider drastic measures as XXL ASA's (OB:XXL) recent kr133m drop adds to long-term losses

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OB:XXL
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Every investor in XXL ASA (OB:XXL) should be aware of the most powerful shareholder groups. With 32% stake, institutions 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.

And institutional investors endured the highest losses after the company's share price fell by 11% last week. The recent loss, which adds to a one-year loss of 69% for stockholders, may not sit well with this group of investors. Institutions or "liquidity providers" control large sums of money and therefore, these types of investors usually have a lot of influence over stock price movements. As a result, if the downtrend continues, institutions may face pressures to sell XXL, which might have negative implications on individual investors.

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

If you're not interested in researching XXL's ownership structure, we have a free list of interesting investing ideas to potentially inspire your next investment!

ownership-breakdown
OB:XXL Ownership Breakdown October 3rd 2022

What Does The Institutional Ownership Tell Us About XXL?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

We can see that XXL does have institutional investors; and they hold a good portion of the company's stock. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see XXL's historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
OB:XXL Earnings and Revenue Growth October 3rd 2022

Hedge funds don't have many shares in XXL. Looking at our data, we can see that the largest shareholder is Altor Equity Partners AB with 25% of shares outstanding. In comparison, the second and third largest shareholders hold about 14% and 9.4% of the stock. Additionally, the company's CEO Pal Wibe directly holds 0.9% of the total shares outstanding.

On looking further, we found that 57% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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. 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 XXL

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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 some shares in XXL ASA. As individuals, the insiders collectively own kr40m worth of the kr1.1b company. It is good to see some investment by insiders, but we usually like to see higher insider holdings. It might be worth checking if those insiders have been buying.

General Public Ownership

With a 24% ownership, the general public, mostly comprising of individual investors, have some degree of sway over XXL. 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 Equity Ownership

With a stake of 25%, private equity firms could influence the XXL board. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Private Company Ownership

It seems that Private Companies own 15%, of the XXL 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 1 warning sign for XXL you should be aware of.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.

Find out whether XXL is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

About OB:XXL

XXL

XXL ASA operates as a sports retailer. It offers sports equipment and sportswear for various sports, including running, football, golf, water sports, racket sports, and ice hockey; and fitness equipment, including treadmills and rowing machines, as well as food supplements and nutrition.

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)
Valuation5
Future Growth4
Past Performance0
Financial Health6
Dividends3

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

Flawless balance sheet and undervalued.