Stock Analysis

Institutional investors may adopt severe steps after NCAB Group AB (publ)'s (STO:NCAB) latest 8.6% drop adds to a year losses

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OM:NCAB
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Key Insights

  • Given the large stake in the stock by institutions, NCAB Group's stock price might be vulnerable to their trading decisions
  • A total of 7 investors have a majority stake in the company with 51% ownership
  • Insiders have been selling lately

Every investor in NCAB Group AB (publ) (STO:NCAB) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 63% to be precise, is institutions. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And institutional investors endured the highest losses after the company's share price fell by 8.6% last week. This set of investors may especially be concerned about the current loss, which adds to a one-year loss of 15% for shareholders. Often called “market makers”, institutions wield significant power in influencing the price dynamics of any stock. As a result, if the downtrend continues, institutions may face pressures to sell NCAB Group, which might have negative implications on individual investors.

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

Check out our latest analysis for NCAB Group

ownership-breakdown
OM:NCAB Ownership Breakdown March 14th 2023

What Does The Institutional Ownership Tell Us About NCAB Group?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

As you can see, institutional investors have a fair amount of stake in NCAB Group. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at NCAB Group's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
OM:NCAB Earnings and Revenue Growth March 14th 2023

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Hedge funds don't have many shares in NCAB Group. The company's largest shareholder is R12 Kapital AB, with ownership of 16%. For context, the second largest shareholder holds about 8.0% of the shares outstanding, followed by an ownership of 7.7% by the third-largest shareholder.

We did some more digging and found that 7 of the top shareholders account for roughly 51% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of NCAB Group

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

We can see that insiders own shares in NCAB Group AB (publ). In their own names, insiders own kr533m worth of stock in the kr9.9b company. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public-- including retail investors -- own 13% stake in the company, and hence can't easily be ignored. 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 Equity Ownership

Private equity firms hold a 16% stake in NCAB Group. This suggests they can be influential in key policy decisions. 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that NCAB Group is showing 2 warning signs in our investment analysis , you should know about...

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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