Private companies who have a significant stake must be disappointed along with institutions after Tecnoglass Inc.'s (NYSE:TGLS) market cap dropped by US$68m
Simply Wall St
4 min read
Key Insights
Tecnoglass' significant private companies ownership suggests that the key decisions are influenced by shareholders from the larger public
52% of the company is held by a single shareholder (Energy Holding Corporation)
To get a sense of who is truly in control of Tecnoglass Inc. (NYSE:TGLS), it is important to understand the ownership structure of the business. We can see that private companies own the lion's share in the company with 52% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
While the holdings of private companies took a hit after last week’s 3.0% price drop, institutions with their 27% holdings also suffered.
Let's delve deeper into each type of owner of Tecnoglass, beginning with the chart below.
What Does The Institutional Ownership Tell Us About Tecnoglass?
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.
Tecnoglass already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Tecnoglass, (below). Of course, keep in mind that there are other factors to consider, too.
NYSE:TGLS Earnings and Revenue Growth July 30th 2023
We note that hedge funds don't have a meaningful investment in Tecnoglass. Energy Holding Corporation is currently the company's largest shareholder with 52% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. For context, the second largest shareholder holds about 2.6% of the shares outstanding, followed by an ownership of 1.5% by the third-largest shareholder.
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 Tecnoglass
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.
Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.
Shareholders would probably be interested to learn that insiders own shares in Tecnoglass Inc.. This is a big company, so it is good to see this level of alignment. Insiders own US$29m worth of shares (at current prices). If you would like to explore the question of insider alignment, you can click here to see if insiders have been buying or selling.
General Public Ownership
With a 20% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Tecnoglass. 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.
Private Company Ownership
We can see that Private Companies own 52%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example - Tecnoglass has 1 warning sign we think you should be aware of.
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.
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