Private equity firms are Teqnion AB (publ)'s (STO:TEQ) biggest owners and were hit after market cap dropped kr403m

By
Simply Wall St
Published
November 16, 2021
OM:TEQ
Source: Shutterstock

To get a sense of who is truly in control of Teqnion AB (publ) (STO:TEQ), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 37% to be precise, is private equity firms. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As market cap fell to kr2.5b last week, private equity firms would have faced the highest losses than any other shareholder groups of the company.

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

View our latest analysis for Teqnion

ownership-breakdown
OM:TEQ Ownership Breakdown November 17th 2021

What Does The Institutional Ownership Tell Us About Teqnion?

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.

We can see that Teqnion does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Teqnion's historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
OM:TEQ Earnings and Revenue Growth November 17th 2021

We note that hedge funds don't have a meaningful investment in Teqnion. Our data shows that Vixar AB is the largest shareholder with 37% of shares outstanding. For context, the second largest shareholder holds about 7.2% of the shares outstanding, followed by an ownership of 5.9% by the third-largest shareholder. In addition, we found that Johan Steene, the CEO has 5.7% of the shares allocated to their name.

A more detailed study of the shareholder registry showed us that 3 of the top shareholders have a considerable amount of ownership in the company, via their 50% stake.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Teqnion

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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.

Our information suggests that insiders maintain a significant holding in Teqnion AB (publ). Insiders have a kr578m stake in this kr2.5b business. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 34% stake in the company, and hence can't easily be ignored. 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.

Private Equity Ownership

Private equity firms hold a 37% stake in Teqnion. This suggests they can be influential in key policy decisions. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Teqnion better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Teqnion .

Of course this may not be the best stock to buy. So take a peek at this free 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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