Stock Analysis

Private companies who have a significant stake must be disappointed along with institutions after Galp Energia, SGPS, S.A.'s (ELI:GALP) market cap dropped by €985m

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Key Insights

  • Significant control over Galp Energia SGPS by private companies implies that the general public has more power to influence management and governance-related decisions
  • 51% of the business is held by the top 4 shareholders
  • Institutional ownership in Galp Energia SGPS is 38%

If you want to know who really controls Galp Energia, SGPS, S.A. (ELI:GALP), then you'll have to look at the makeup of its share registry. We can see that private companies own the lion's share in the company with 41% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Following a 11% decrease in the stock price last week, private companies suffered the most losses, but institutions who own 38% stock also took a hit.

In the chart below, we zoom in on the different ownership groups of Galp Energia SGPS.

Check out our latest analysis for Galp Energia SGPS

ENXTLS:GALP Ownership Breakdown March 16th 2023

What Does The Institutional Ownership Tell Us About Galp Energia SGPS?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

As you can see, institutional investors have a fair amount of stake in Galp Energia SGPS. 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 Galp Energia SGPS' historic earnings and revenue below, but keep in mind there's always more to the story.

ENXTLS:GALP Earnings and Revenue Growth March 16th 2023

We note that hedge funds don't have a meaningful investment in Galp Energia SGPS. Amorim Energia B.V. is currently the company's largest shareholder with 33% of shares outstanding. PARPUBLICA - Participacoes Publicas (SGPS), SA is the second largest shareholder owning 7.5% of common stock, and Massachusetts Financial Services Company holds about 5.1% of the company stock.

To make our study more interesting, we found that the top 4 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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 Galp Energia SGPS

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.

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 less than 1% of Galp Energia, SGPS, S.A.. But they may have an indirect interest through a corporate structure that we haven't picked up on. It is a very large company, so it would be surprising to see insiders own a large proportion of the company. Though their holding amounts to less than 1%, we can see that board members collectively own €1.3m worth of shares (at current prices). 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

The general public-- including retail investors -- own 21% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

It seems that Private Companies own 41%, of the Galp Energia SGPS stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

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. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Galp Energia SGPS (at least 1 which is a bit unpleasant) , and understanding them should be part of your investment process.

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.

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