Babcock & Wilcox Enterprises, Inc.'s (NYSE:BW) institutional investors lost 10% over the past week but have profited from longer-term gains

Key Insights

• Institutions' substantial holdings in Babcock & Wilcox Enterprises implies that they have significant influence over the company's share price
• 51% of the business is held by the top 6 shareholders
• Insiders have sold recently

To get a sense of who is truly in control of Babcock & Wilcox Enterprises, Inc. (NYSE:BW), 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 institutions. 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 10% in value last week. However, the 29% 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.

Let's take a closer look to see what the different types of shareholders can tell us about Babcock & Wilcox Enterprises.

Check out our latest analysis for Babcock & Wilcox Enterprises

What Does The Institutional Ownership Tell Us About Babcock & Wilcox Enterprises?

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 Babcock & Wilcox Enterprises. 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. 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 Babcock & Wilcox Enterprises' earnings history below. Of course, the future is what really matters.

It looks like hedge funds own 7.1% of Babcock & Wilcox Enterprises shares. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. B. Riley Financial, Inc. is currently the largest shareholder, with 29% of shares outstanding. In comparison, the second and third largest shareholders hold about 7.1% and 6.7% of the stock. In addition, we found that Kenneth Young, the CEO has 1.7% of the shares allocated to their name.

We did some more digging and found that 6 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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Babcock & Wilcox Enterprises

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.

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.

Shareholders would probably be interested to learn that insiders own shares in Babcock & Wilcox Enterprises, Inc.. It has a market capitalization of just US$138m, and insiders have US$8.0m worth of shares, in their own names. Some would say this shows alignment of interests between shareholders and the board, though we generally prefer to see bigger insider holdings. But it might be worth checking if those insiders have been selling.

General Public Ownership

With a 21% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Babcock & Wilcox Enterprises. 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.

Public Company Ownership

It appears to us that public companies own 29% of Babcock & Wilcox Enterprises. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 5 warning signs for Babcock & Wilcox Enterprises (1 is significant!) that you should be aware of before investing here.

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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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.