Institutional investors are Arena.pl S.A.'s (WSE:ARE) biggest bettors and were rewarded after last week's zł102m market cap gain

By
Simply Wall St
Published
January 12, 2022
WSE:ARE
Source: Shutterstock

A look at the shareholders of Arena.pl S.A. (WSE:ARE) can tell us which group is most powerful. We can see that institutions own the lion's share in the company with 46% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And things are looking up for institutional investors after the company gained zł102m in market cap last week. The gains from last week would have further boosted the one-year return to shareholders which currently stand at 354%.

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

See our latest analysis for Arena.pl

ownership-breakdown
WSE:ARE Ownership Breakdown January 12th 2022

What Does The Institutional Ownership Tell Us About Arena.pl?

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

earnings-and-revenue-growth
WSE:ARE Earnings and Revenue Growth January 12th 2022

Hedge funds don't have many shares in Arena.pl. AgioFunds Towarzystwo Funduszy Inwestycyjnych S.A. is currently the company's largest shareholder with 46% of shares outstanding. In comparison, the second and third largest shareholders hold about 22% and 10% of the stock.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 68% stake.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Arena.pl

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.

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 Arena.pl S.A.. In their own names, insiders own zł5.4m worth of stock in the zł440m company. Some would say this shows alignment of interests between shareholders and the board, though we generally prefer to see bigger insider holdings. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 20% stake in Arena.pl. 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 32%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Arena.pl better, we need to consider many other factors. Be aware that Arena.pl is showing 4 warning signs in our investment analysis , and 2 of those make us uncomfortable...

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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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