Stock Analysis

State or government account for 54% of Telenor ASA's (OB:TEL) ownership, while institutions account for 30%

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OB:TEL
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If you want to know who really controls Telenor ASA (OB:TEL), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 54% to be precise, is state or government. Put another way, the group faces the maximum upside potential (or downside risk).

And institutions on the other hand have a 30% ownership in the company. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders.

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

Our analysis indicates that TEL is potentially undervalued!

ownership-breakdown
OB:TEL Ownership Breakdown November 17th 2022

What Does The Institutional Ownership Tell Us About Telenor?

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 Telenor 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 Telenor's historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
OB:TEL Earnings and Revenue Growth November 17th 2022

Telenor is not owned by hedge funds. The company's largest shareholder is Narings- Og Handelsdepartementet, with ownership of 54%. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. Meanwhile, the second and third largest shareholders, hold 4.7% and 2.5%, of the shares outstanding, respectively.

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

Insider Ownership Of Telenor

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

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.

Our most recent data indicates that insiders own less than 1% of Telenor ASA. As it is a large company, we'd only expect insiders to own a small percentage of it. But it's worth noting that they own kr48m worth of shares. Arguably recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

With a 16% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Telenor. 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. For example, we've discovered 3 warning signs for Telenor that you should be aware of before investing here.

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.

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