Institutional investors may adopt severe steps after IDEX Biometrics ASA's (OB:IDEX) latest 10% drop adds to a year losses

By
Simply Wall St
Published
April 12, 2022
OB:IDEX
Source: Shutterstock

To get a sense of who is truly in control of IDEX Biometrics ASA (OB:IDEX), it is important to understand the ownership structure of the business. With 49% 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 so it follows that institutional investors was the group most impacted after the company's market cap fell to kr1.7b last week after a 10% drop in the share price. The recent loss, which adds to a one-year loss of 39% 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. Hence, if weakness in IDEX Biometrics' share price continues, institutional investors may feel compelled to sell the stock, which might not be ideal for individual investors.

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

Check out our latest analysis for IDEX Biometrics

ownership-breakdown
OB:IDEX Ownership Breakdown April 12th 2022

What Does The Institutional Ownership Tell Us About IDEX Biometrics?

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.

As you can see, institutional investors have a fair amount of stake in IDEX Biometrics. 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 IDEX Biometrics, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
OB:IDEX Earnings and Revenue Growth April 12th 2022

IDEX Biometrics is not owned by hedge funds. The company's largest shareholder is Robert Keith, with ownership of 18%. UBS Asset Management is the second largest shareholder owning 7.3% of common stock, and Societe Generale Group, Banking Investments holds about 7.2% of the company stock.

On further inspection, we found that more than half the company's shares are owned by the top 6 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of IDEX Biometrics

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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.

It seems insiders own a significant proportion of IDEX Biometrics ASA. It has a market capitalization of just kr1.7b, and insiders have kr331m worth of shares in their own names. 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, who are usually individual investors, hold a 21% stake in IDEX Biometrics. 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

We can see that Private Companies own 9.5%, of the shares on issue. 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:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 3 warning signs for IDEX Biometrics you should be aware of.

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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