Could The Energy World Corporation Ltd (ASX:EWC) Ownership Structure Tell Us Something Useful?
A look at the shareholders of Energy World Corporation Ltd (ASX:EWC) can tell us which group is most powerful. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. I quite like to see at least a little bit of insider ownership. As Charlie Munger said ‘Show me the incentive and I will show you the outcome.
Energy World is a smaller company with a market capitalization of AU$203m, so it may still be flying under the radar of many institutional investors. Taking a look at our data on the ownership groups (below), it seems that institutions are not really that prevalent on the share registry. Let’s delve deeper into each type of owner, to discover more about Energy World.
View our latest analysis for Energy World
What Does The Lack Of Institutional Ownership Tell Us About Energy World?
Small companies that are not very actively traded often lack institutional investors, but it’s less common to see large companies without them.
There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don’t attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. Alternatively, there might be something about the company that has kept institutional investors away. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of Energy World, for yourself, below.
We note that hedge funds don’t have a meaningful investment in Energy World. Looking at our data, we can see that the largest shareholder is the CEO Stewart William Elliott with 34% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 5.6% and 0.7%, of the shares outstanding, respectively.
A deeper look at our ownership data shows that the top 16 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.
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. We’re not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.
Insider Ownership Of Energy World
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.
Our information suggests that insiders maintain a significant holding in Energy World Corporation Ltd. It has a market capitalization of just AU$203m, and insiders have AU$88m worth of shares in their own names. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.
General Public Ownership
The general public — including retail investors — own 55% of Energy World. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we’ve discovered 3 warning signs for Energy World (2 are a bit unpleasant!) that you should be aware of before investing here.
Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.
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.
