A look at the shareholders of Diversified Energy Company PLC (LON:DEC) can tell us which group is most powerful. We can see that institutions own the lion's share in the company with 86% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
Last week's UK£67m market cap gain would probably be appreciated by institutional investors, especially after a year of 16% losses.
In the chart below, we zoom in on the different ownership groups of Diversified Energy.
What Does The Institutional Ownership Tell Us About Diversified Energy?
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.
We can see that Diversified Energy does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Diversified Energy's earnings history below. Of course, the future is what really matters.
LSE:DEC Earnings and Revenue Growth July 17th 2024
Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Hedge funds don't have many shares in Diversified Energy. The company's largest shareholder is BlackRock, Inc., with ownership of 7.0%. Columbia Management Investment Advisers, LLC is the second largest shareholder owning 5.1% of common stock, and Jupiter Fund Management Plc holds about 5.0% of the company stock. Additionally, the company's CEO Robert Hutson directly holds 2.6% of the total shares outstanding.
Looking at the shareholder registry, we can see that 51% of the ownership is controlled by the top 13 shareholders, meaning that no single shareholder has a majority interest in the ownership.
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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
Insider Ownership Of Diversified Energy
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.
Our most recent data indicates that insiders own some shares in Diversified Energy Company PLC. In their own names, insiders own UK£21m worth of stock in the UK£590m company. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.
General Public Ownership
With a 10% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Diversified Energy. 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.
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.
