Stock Analysis

Onde S.A.'s (WSE:OND) 13% loss last week hit both individual investors who own 60% as well as institutions

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Key Insights

  • Significant control over Onde by public companies implies that the general public has more power to influence management and governance-related decisions
  • 60% of the company is held by a single shareholder (Erbud S.A.)
  • Institutional ownership in Onde is 19%

To get a sense of who is truly in control of Onde S.A. (WSE:OND), it is important to understand the ownership structure of the business. With 60% stake, public companies possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While institutions, who own 19% shares weren’t spared from last week’s zł110m market cap drop, public companies as a group suffered the maximum losses

Let's delve deeper into each type of owner of Onde, beginning with the chart below.

View our latest analysis for Onde

WSE:OND Ownership Breakdown March 16th 2023

What Does The Institutional Ownership Tell Us About Onde?

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.

We can see that Onde 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 Onde's historic earnings and revenue below, but keep in mind there's always more to the story.

WSE:OND Earnings and Revenue Growth March 16th 2023

Hedge funds don't have many shares in Onde. Our data shows that Erbud S.A. is the largest shareholder with 60% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. Meanwhile, the second and third largest shareholders, hold 6.4% and 5.0%, of the shares outstanding, respectively.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Onde

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.

Shareholders would probably be interested to learn that insiders own shares in Onde S.A.. It has a market capitalization of just zł737m, and insiders have zł55m worth of shares, in their own names. 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

The general public, who are usually individual investors, hold a 14% stake in Onde. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Public Company Ownership

Public companies currently own 60% of Onde stock. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Onde better, we need to consider many other factors. To that end, you should learn about the 2 warning signs we've spotted with Onde (including 1 which is concerning) .

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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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