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London
April 18, 2024
PI Global Investments
Hedge Funds

Recent uptick might appease Malin Corporation plc (ISE:MLC) hedge funds owners after losing 7.6% over the past year


Key Insights

  • Given the large stake in the stock by institutions, Malin’s stock price might be vulnerable to their trading decisions
  • The top 4 shareholders own 60% of the company
  • 16% of Malin is held by insiders

Every investor in Malin Corporation plc (ISE:MLC) should be aware of the most powerful shareholder groups. With 28% stake, hedge funds possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

Hedge funds investors would appreciate the 13% increase in share price last week, given their one-year losses have totalled a disappointing 7.6%.

In the chart below, we zoom in on the different ownership groups of Malin.

See our latest analysis for Malin

ownership-breakdown
ISE:MLC Ownership Breakdown April 3rd 2024

What Does The Institutional Ownership Tell Us About Malin?

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.

Malin already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Malin, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
ISE:MLC Earnings and Revenue Growth April 3rd 2024

It would appear that 28% of Malin shares are controlled by hedge funds. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Our data shows that Pentwater Capital Management LP is the largest shareholder with 28% of shares outstanding. The second and third largest shareholders are Reedy Creek Investments LLC and Pension Protection Fund, with an equal amount of shares to their name at 11%.

Our research also brought to light the fact that roughly 60% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.

Researching institutional ownership is a good way to gauge and filter a stock’s expected performance. The same can be achieved by studying analyst sentiments. Our information suggests that there isn’t any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Malin

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 Malin Corporation plc. Insiders own €18m worth of shares in the €115m company. 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, who are usually individual investors, hold a 24% stake in Malin. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Equity Ownership

With a stake of 10%, private equity firms could influence the Malin board. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Private Company Ownership

It seems that Private Companies own 11%, of the Malin stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it’s hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

It’s always worth thinking about the different groups who own shares in a company. But to understand Malin better, we need to consider many other factors. Case in point: We’ve spotted 2 warning signs for Malin you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.

Valuation is complex, but we’re helping make it simple.

Find out whether Malin is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

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.



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