Institutions profited after Nelly Group AB (publ)'s (STO:NELLY) market cap rose kr369m last week but private equity firms profited the most

Key Insights

• The considerable ownership by private equity firms in Nelly Group indicates that they collectively have a greater say in management and business strategy
• The top 2 shareholders own 51% of the company
• Institutions own 30% of Nelly Group

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A look at the shareholders of Nelly Group AB (publ) (STO:NELLY) can tell us which group is most powerful. The group holding the most number of shares in the company, around 34% 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.

Following a 27% increase in the stock price last week, private equity firms profited the most, but institutions who own 30% stock also stood to gain from the increase.

Let's take a closer look to see what the different types of shareholders can tell us about Nelly Group.

Check out our latest analysis for Nelly Group

What Does The Institutional Ownership Tell Us About Nelly Group?

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

Hedge funds don't have many shares in Nelly Group. Looking at our data, we can see that the largest shareholder is Rite Internet Ventures Holding AB with 34% of shares outstanding. In comparison, the second and third largest shareholders hold about 17% and 9.8% of the stock.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Nelly Group

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

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own some shares in Nelly Group AB (publ). In their own names, insiders own kr132m worth of stock in the kr1.7b company. 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 10% stake in Nelly Group. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

With a stake of 34%, private equity firms could influence the Nelly Group board. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Private Company Ownership

We can see that Private Companies own 18%, of the shares on issue. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 1 warning sign for Nelly Group you should be aware of.

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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.