With 84% ownership, Severfield plc (LON:SFR) boasts of strong institutional backing

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editorial-team@simplywallst.com (Simply Wall St)

Sun, Oct 13, 2024, 1:37 AM 4 min read

Institutions' substantial holdings in Severfield implies that they have significant influence over the company's share price
A total of 9 investors have a majority stake in the company with 52% ownership
Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock

A look at the shareholders of Severfield plc (LON:SFR) can tell us which group is most powerful. We can see that institutions own the lion's share in the company with 84% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Because institutional owners have a huge pool of resources and liquidity, their investing decisions tend to carry a great deal of weight, especially with individual investors. Hence, having a considerable amount of institutional money invested in a company is often regarded as a desirable trait.

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

Check out our latest analysis for Severfield

ownership-breakdown — LSE:SFR Ownership Breakdown October 13th 2024

What Does The Institutional Ownership Tell Us About Severfield?

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.

We can see that Severfield does have institutional investors; and they hold a good portion of the company's stock. 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 Severfield's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth — LSE:SFR Earnings and Revenue Growth October 13th 2024

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Severfield is not owned by hedge funds. Our data shows that J O Hambro Capital Management Limited is the largest shareholder with 10% of shares outstanding. In comparison, the second and third largest shareholders hold about 9.2% and 7.0% of the stock. Furthermore, CEO Alan Dunsmore is the owner of 0.5% of the company's shares.

On further inspection, we found that more than half the company's shares are owned by the top 9 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Severfield

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.

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 Severfield plc. In their own names, insiders own UK£2.8m worth of stock in the UK£241m company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 14% 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Severfield better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Severfield .

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.