Institutional investors may overlook Svenska Cellulosa Aktiebolaget SCA (publ)'s (STO:SCA B) recent kr9.1b market cap drop as long-term gains remain positive

By
Simply Wall St
Published
May 09, 2022
OM:SCA B
Source: Shutterstock

A look at the shareholders of Svenska Cellulosa Aktiebolaget SCA (publ) (STO:SCA B) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are institutions with 65% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

No shareholder likes losing money on their investments, especially institutional investors who saw their holdings drop 6.7% in value last week. However, the 21% one-year return to shareholders might have softened the blow. We would assume however, that they would be on the lookout for weakness in the future.

In the chart below, we zoom in on the different ownership groups of Svenska Cellulosa Aktiebolaget.

View our latest analysis for Svenska Cellulosa Aktiebolaget

ownership-breakdown
OM:SCA B Ownership Breakdown May 9th 2022

What Does The Institutional Ownership Tell Us About Svenska Cellulosa Aktiebolaget?

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.

As you can see, institutional investors have a fair amount of stake in Svenska Cellulosa Aktiebolaget. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Svenska Cellulosa Aktiebolaget, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
OM:SCA B Earnings and Revenue Growth May 9th 2022

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. We note that hedge funds don't have a meaningful investment in Svenska Cellulosa Aktiebolaget. AB Industrivärden (publ) is currently the company's largest shareholder with 10% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 8.3% and 7.2%, of the shares outstanding, respectively.

A closer look at our ownership figures suggests that the top 12 shareholders have a combined ownership of 51% implying that no single shareholder has a majority.

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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Svenska Cellulosa Aktiebolaget

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 data suggests that insiders own under 1% of Svenska Cellulosa Aktiebolaget SCA (publ) in their own names. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own kr70m of stock. It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

With a 35% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Svenska Cellulosa Aktiebolaget. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

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. Be aware that Svenska Cellulosa Aktiebolaget is showing 2 warning signs in our investment analysis , and 1 of those is significant...

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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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