Significant control over Hammond Power Solutions by retail investors implies that the general public has more power to influence management and governance-related decisions
45% of the business is held by the top 25 shareholders
Every investor in Hammond Power Solutions Inc. (TSE:HPS.A) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 52% to be precise, is retail investors. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
And individual insiders on the other hand have a 28% ownership in the company. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones.
In the chart below, we zoom in on the different ownership groups of Hammond Power Solutions.
What Does The Institutional Ownership Tell Us About Hammond Power Solutions?
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 Hammond Power Solutions. 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 Hammond Power Solutions' earnings history below. Of course, the future is what really matters.
TSX:HPS.A Earnings and Revenue Growth October 31st 2024
Hedge funds don't have many shares in Hammond Power Solutions. William Hammond is currently the largest shareholder, with 27% of shares outstanding. Capital Research and Management Company is the second largest shareholder owning 6.1% of common stock, and Needham Investment Management, LLC holds about 1.5% of the company stock.
Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.
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 is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.
Insider Ownership Of Hammond Power Solutions
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.
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 a reasonable proportion of Hammond Power Solutions Inc.. It is very interesting to see that insiders have a meaningful CA$459m stake in this CA$1.7b business. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public -- including retail investors -- own 52% of Hammond Power Solutions. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Hammond Power Solutions better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Hammond Power Solutions 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.
