In This Article:
In this article, I will take a quick look at Alerion Clean Power Sp.A.’s (BIT:ARN) recent ownership structure – an unconventional investing subject, but an important one. The impact of a company’s ownership structure affects both its short- and long-term performance. Since the effect of an active institutional investor with a similar ownership as a passive pension-fund can be vastly different on a company’s corporate governance and accountability of shareholders, investors should take a closer look at ARN’s shareholder registry.
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Institutional Ownership
Institutional investors typically buy and sell shares in large magnitudes which can significantly sway the share price, especially when there are relatively small amounts of shares available on the market to trade. With hardly any institutional ownership, ARN stock poses limited concern relating to the effect institutional block trades have on its stock price.
Insider Ownership
Insiders form another group of important ownership types as they manage the company’s operations and decide the best use of capital. Insider ownership has been linked to better alignment between management and shareholders. ARN insiders hold a not-so-significant 4.04% stake in the company, which somewhat aligns their interests with that of shareholders. However, a higher level of insider ownership has been linked to management executing on high-returning projects instead of expansion projects for the sake of apparent growth. It would also be interesting to check what insiders have been doing with their shareholding recently. Insider buying can be a positive indicator of future performance, but a selling decision can be simply driven by personal financial requirements.
Private Company Ownership
Another important group of owners for potential investors in ARN are private companies that hold a stake of 118.36% in ARN. These are companies that are mainly invested due to their strategic interests or are incentivized by reaping capital gains on investments their shareholdings. An ownership of this size indicates a strong financial backing and has the potential to influence ARN’s business strategy. Thus, investors should dig deeper into ARN’s business relations with these companies and how it can affect shareholder returns in the long-term.
Next Steps:
Institutional ownership in ARN is not at a level that would concern investors. We are less likely to see sustained downtrends or significant volatility resulting from large institutional trading. However, ownership structure should not be the only focus of your research when constructing an investment thesis around ARN. Instead, you should be evaluating company-specific factors such as the intrinsic valuation, which is a key driver of Alerion Clean Power’s share price. I urge you to complete your research by taking a look at the following: