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In the wake of AutoCanada Inc.’s (TSE:ACQ) latest CA$98m market cap drop, institutional owners may be forced to take severe actions

Important Findings

  • The sizeable institutional holdings in AutoCanada imply that they have a significant impact on the company’s share price
  • The top 4 shareholders own 50% of the company
  • Analyst forecasts along with ownership data serve to provide a strong idea of ​​a company’s prospects

Every AutoCanada Inc. (TSE:ACQ) investor should be aware of the most powerful shareholder groups. And the group holding the biggest piece of the pie are institutions with 58% ownership. In other words, the group will gain the most (or lose the most) from their investment in the company.

And institutional investors saw their holdings fall 14% last week. This group of investors may be particularly concerned about the current loss, which adds to a 17% one-year loss for shareholders. Institutions or “liquidity providers” control large sums of money and therefore these types of investors usually have a large influence on stock price movements. Therefore, if the downtrend continues, institutions could come under pressure to sell AutoCanada, which could have a negative impact on individual investors.

In the table below, we zoom in on AutoCanada’s different ownership groups.

Check out our latest analysis for AutoCanada

TSX: ACQ ownership breakdown March 3, 2023

What Does Institutional Ownership Tell Us About AutoCanada?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they’re often more excited about a stock once it’s included in a major index. We would expect most companies to have some institutions on the register, especially as they grow.

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We can see that AutoCanada has institutional investors; and they hold a good portion of the company’s stock. This suggests some credibility among professional investors. But we can’t rely on that alone, as institutions sometimes make bad investments, just like everyone else. If several institutes change their opinion on a stock at the same time, the share price could fall quickly. So it’s worth checking out AutoCanada’s earnings history below. Of course, what really matters is the future.

TSX:ACQ Earnings and Revenue Growth March 3, 2023

Institutional investors own over 50% of the company, so collectively they can likely heavily influence board decisions. Our data shows that hedge funds own 12% of AutoCanada. This is worth noting as hedge funds are often quite active investors who may be trying to influence management. Many want to see value creation (and a higher share price) in the short or medium term. EdgePoint Investment Group Inc. is currently the largest shareholder with 24% of outstanding shares. BloombergSen Inc. and FMR LLC are the second and third largest shareholders with 12% and 11% of the outstanding shares, respectively.

Upon closer inspection, we found that 50% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a significant say in company decisions.

Studying institutional ownership is a good way to gauge and filter a stock’s expected performance. The same can be done by studying analyst sentiment. There are many analysts covering the stock, so it might be worth seeing what they’re forecasting as well.

Insider ownership of AutoCanada

The definition of corporate insider can be subjective and varies by jurisdiction. Our data reflects individual insiders and captures at least board members. Management ultimately reports to the board of directors. However, it is not uncommon for managers to be board members, especially if they are founders or CEOs.

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Insider ownership is positive when it signals leadership thinks like the true owners of the company. However, a high proportion of insiders can give immense power to even a small group within the organization. This can sometimes be negative.

Our information indicates that AutoCanada Inc. insiders own less than 1% of the company. It has a market cap of just CA$581 million and the board has shares in its own name worth just CA$3.6 million. We generally like to see a board that is more invested. However, it might be worth checking to see if these insiders have bought.

General Public Property

With 29% ownership, the general public, made up mostly of individual investors, has some influence over AutoCanada. While this ownership size is substantial, it may not be enough to change company policy if the decision is not aligned with other major shareholders.

Next Steps:

While it’s worth considering the different groups that own a business, there are other factors that are even more important. Case in point: We discovered it 1 warning sign for AutoCanada you should be aware of this.

Ultimately the future is the most important thing. You can access it free Report on analysts’ forecasts for the company.

Note: The figures in this article are calculated using data for the last twelve months, relating to the 12-month period ending on the last date of the month to which the financial statements are dated. This may not tally with the annual report figures for the full year.

This Simply Wall St article is of a general nature. We provide comments based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock and does not take into account your goals or financial situation. Our goal is to offer you long-term focused analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.

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