Institutional investors may overlook Entravision Communications Corporation's (NYSE:EVC) recent US$75m market cap drop as long-term gains remain positive

By
Simply Wall St
Published
November 27, 2021
NYSE:EVC
Source: Shutterstock

A look at the shareholders of Entravision Communications Corporation (NYSE:EVC) can tell us which group is most powerful. We can see that institutions own the lion's share in the company with 58% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

No shareholder likes losing money on their investments, especially institutional investors who saw their holdings drop 11% in value last week. Still, the 143% one-year gains may have helped mitigate their overall losses. But they would probably be wary of future losses.

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

View our latest analysis for Entravision Communications

ownership-breakdown
NYSE:EVC Ownership Breakdown November 28th 2021

What Does The Institutional Ownership Tell Us About Entravision Communications?

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.

As you can see, institutional investors have a fair amount of stake in Entravision Communications. 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 Entravision Communications' earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
NYSE:EVC Earnings and Revenue Growth November 28th 2021

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Entravision Communications is not owned by hedge funds. With a 14% stake, CEO Walter Ulloa is the largest shareholder. Meanwhile, the second and third largest shareholders, hold 10% and 7.8%, of the shares outstanding, respectively.

We did some more digging and found that 8 of the top shareholders account for roughly 50% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Entravision Communications

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 most recent data indicates that insiders own a reasonable proportion of Entravision Communications Corporation. Insiders have a US$114m stake in this US$600m 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

With a 23% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Entravision Communications. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Entravision Communications better, we need to consider many other factors. To that end, you should be aware of the 3 warning signs we've spotted with Entravision Communications .

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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