With 51% institutional ownership, B&M European Value Retail S.A. (LON:BME) is a favorite amongst the big guns

To get an idea of ​​who is actually in control of B&M European Value Retail SA (LON:BME), it is important to understand the ownership structure of the company. The group that holds the largest number of shares in the company, around 51% specifically, is that of the institutions. Put another way, the group faces maximum upside potential (or downside risk).

Given the vast amounts of money and research capabilities at their disposal, institutional ownership tends to carry a lot of weight, especially among individual investors. As a result, a considerable amount of institutional money invested in a company is generally considered a positive attribute.

Let’s dive into each type of B&M European Value Retail owner, starting with the chart below.

Before we look at the property breakdown, you’d like to know that our analysis indicates that BME is potentially undervalued!

Property breakdown LSE:BME September 8, 2022

What does institutional ownership tell us about B&M European Value Retail?

Institutions often measure themselves against a benchmark when reporting to their own investors, so they often get 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 if they are growing.

As you can see, institutional investors have a sizeable stake in B&M European Value Retail. This may indicate that the company has some degree of credibility in the investment community. However, it is best to be careful about trusting the so-called validation that comes with institutional investors. They also make mistakes sometimes. It’s not uncommon to see a big drop in stock price if two large institutional investors try to sell a stock at the same time. So it’s worth checking out B&M European Value Retail’s past earnings track record (below). Of course, keep in mind that there are other factors to consider as well.

earnings-and-revenue-growth
LSE:BME Results and income growth September 8, 2022

Institutional investors own more than 50% of the company, so together they can probably heavily influence board decisions. B&M European Value Retail is not owned by hedge funds. Capital Research and Management Company is currently the company’s largest shareholder with 12% of the outstanding shares. By comparison, the second and third largest shareholders own around 7.0% and 5.0% of the shares.

Looking at the shareholder register, we can see that 50% ownership is controlled by the top 15 shareholders, meaning that no single shareholder has a majority ownership interest.

While it makes sense to study a company’s institutional ownership data, it also makes sense to study analyst sentiment to know which way the wind is blowing. Quite a few analysts cover stocks, so you could see anticipated growth pretty easily.

Internally owned by B&M European Value Retail

The definition of company insiders can be subjective and varies between jurisdictions. Our data reflects individual insider information, capturing board members at a minimum. The management of the company responds to the board and it must represent the interests of the shareholders. In particular, senior managers are sometimes on the board.

Internal ownership is positive when it indicates that leaders are thinking like the true owners of the company. However, high internal ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our information suggests that members of B&M European Value Retail SA own less than 1% of the company. However, it is possible that insiders may have an indirect interest through a more complex structure. It’s a big company, so even a small proportionate interest can create alignment between the board and the shareholders. In this case, insiders own £358,000 worth of shares. Arguably, recent purchases and sales are just as important to consider. You may Click here to see if the experts have been buying or selling.

General public property

The general public, including retail investors, owns a 42% stake in the company and therefore cannot be easily ignored. While this group may not necessarily call the shots, they can certainly have a real influence on how the company is run.

Private company ownership

It appears that private companies own 7.0% of B&M European Value Retail shares. Might be worth digging into this. If related parties, such as insiders, have an interest in one of these private companies, that must be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next steps:

It is always worth thinking about the different groups that own shares in a company. But to better understand B&M European Value Retail, we need to consider many other factors. Like the risks, for example. All companies have them, and we have seen 3 warning signs for B&M European Value Retail (of which 1 is a bit off-putting!) that you should know about.

Finally the future is the most important. You can access this free report on analyst forecasts for the company.

Note: The figures in this article are calculated using data from the last twelve months, which refers to the 12-month period ending on the last day of the month in which the financial statement is dated. This may not be consistent with the annual report figures for the full year.

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

Discounted cash flow calculation for each share

Simply Wall St performs a detailed discounted cash flow calculation every 6 hours for every stock in the market, so if you want to find the intrinsic value of any company, simply search here. It’s free.

Leave a Comment