In this analysis, my focus will be on developing a perspective on Perma-Fix Medical SA.’s (WSE:PFM) latest ownership structure, a less discussed, but important factor. Ownership structure of a company has been found to affect share performance over time. Since the same amount of capital coming from an activist institution and a passive mutual fund has different implications on corporate governance, it is a useful exercise to deconstruct PFM’s shareholder registry.

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Institutional Ownership

With an institutional ownership of 16.96%, PFM can face volatile stock price movements if institutions execute block trades on the open market, more so, when there are relatively small amounts of shares available on the market to trade These moves, at least in the short-term, are generally observed in an institutional ownership mix comprising of active stock pickers, in particular levered hedge funds, which can cause large price swings. In the case of PFM, investors need not worry about such volatility considering active hedge funds don’t have a significant stake. However, we should dig deeper into PFM’s ownership structure and find out how other key ownership classes can affect its investment profile.

General Public Ownership

A substantial ownership of 17.10% in PFM is held by the general public. With this size of ownership, retail investors can collectively play a role in major company policies that affect shareholders returns, including executive remuneration and the appointment of directors. They can also exercise the power to decline an acquisition or merger that may not improve profitability.

Public Company Ownership

Another important group of owners for potential investors in PFM are other public companies that hold a stake of 65.95% in PFM. These are the companies that are mainly invested due to their strategic interests or incentivized by reaping capital gains on investments. This kind of ownership, if predominantly strategic, can give these companies a significant power to affect PFM’s business strategy. Thus, potential investors should look into these business relations and check how it can impact long-term shareholder returns.

Next Steps:

PFM’s considerably high level of institutional ownership calls for further analysis into its margin of safety. This is to avoid getting trapped in a sustained sell-off that is often observed in stocks with this level of institutional participation. However, ownership structure should not be the only focus of your research when constructing an investment thesis around PFM. Rather, you should be examining fundamental factors such as the intrinsic valuation, which is a key driver of Perma-Fix Medical’s share price. I urge you to complete your research by taking a look at the following: