Institutional investors may adopt severe steps after Leclanché SA's (VTX:LECN) latest 17% drop adds to a year losses
editorial-team@simplywallst.com (Simply Wall St)
4 min read
Key Insights
Significantly high institutional ownership implies Leclanché's stock price is sensitive to their trading actions
The top 2 shareholders own 52% of the company
Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock
To get a sense of who is truly in control of Leclanché SA (VTX:LECN), it is important to understand the ownership structure of the business. With 54% stake, institutions possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).
As a result, institutional investors endured the highest losses last week after market cap fell by CHF31m. This set of investors may especially be concerned about the current loss, which adds to a one-year loss of 20% for shareholders. Often called “market movers", 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 Leclanché, which might have negative implications on individual investors.
Let's take a closer look to see what the different types of shareholders can tell us about Leclanché.
What Does The Institutional Ownership Tell Us About Leclanché?
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 Leclanché. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Leclanché's historic earnings and revenue below, but keep in mind there's always more to the story.
SWX:LECN Earnings and Revenue Growth July 17th 2024
Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Leclanché is not owned by hedge funds. The company's largest shareholder is Finexis S.A., with ownership of 35%. Pure Capital S.A. is the second largest shareholder owning 17% of common stock, and Credit Suisse Asset Management (Switzerland) Ltd. holds about 0.6% of the company stock.
To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.
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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.
Insider Ownership Of Leclanché
The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.
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 note our data does not show any board members holding shares, personally. Given we are not picking up on insider ownership, we may have missing data. Therefore, it would be interesting to assess the CEO compensation and tenure, here.
General Public Ownership
The general public, who are usually individual investors, hold a 46% stake in Leclanché. 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 Leclanché better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 5 warning signs for Leclanché (of which 4 are potentially serious!) you should know about.
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.
Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
