SilverBow Resources, Inc.'s (NYSE:SBOW) market cap decline of US$62m may not have as much of an impact on institutional owners after a year of 6.5% returns
Simply Wall St
4 min read
Key Insights
Institutions' substantial holdings in SilverBow Resources implies that they have significant influence over the company's share price
52% of the business is held by the top 6 shareholders
Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock
Every investor in SilverBow Resources, Inc. (NYSE:SBOW) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are institutions with 36% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
Institutional investors endured the highest losses after the company's market cap fell by US$62m last week. However, the 6.5% one-year returns may have helped alleviate their overall losses. But they would probably be wary of future losses.
In the chart below, we zoom in on the different ownership groups of SilverBow Resources.
What Does The Institutional Ownership Tell Us About SilverBow Resources?
Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.
We can see that SilverBow Resources does have institutional investors; and they hold a good portion of the company's stock. 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. 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 SilverBow Resources' historic earnings and revenue below, but keep in mind there's always more to the story.
NYSE:SBOW Earnings and Revenue Growth September 17th 2023
Our data indicates that hedge funds own 23% of SilverBow Resources. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. The company's largest shareholder is Strategic Value Partners, LLC, with ownership of 16%. For context, the second largest shareholder holds about 13% of the shares outstanding, followed by an ownership of 7.3% by the third-largest shareholder. Additionally, the company's CEO Sean Woolverton directly holds 1.3% of the total shares outstanding.
We did some more digging and found that 6 of the top shareholders account for roughly 52% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.
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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
Insider Ownership Of SilverBow Resources
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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.
Shareholders would probably be interested to learn that insiders own shares in SilverBow Resources, Inc.. It has a market capitalization of just US$891m, and insiders have US$25m worth of shares, in their own names. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public-- including retail investors -- own 16% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Private Equity Ownership
With a stake of 20%, private equity firms could influence the SilverBow Resources board. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Like risks, for instance. Every company has them, and we've spotted 4 warning signs for SilverBow Resources (of which 2 are a bit concerning!) 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.
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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.
