Yahoo Finance Hydro One Limited's (TSE:H) last week's 6.1% decline must have disappointed state or government who have a significant stake
Key Insights
The considerable ownership by state or government in Hydro One indicates that they collectively have a greater say in management and business strategy
A total of 3 investors have a majority stake in the company with 51% ownership
To get a sense of who is truly in control of Hydro One Limited (TSE:H), it is important to understand the ownership structure of the business. With 47% stake, state or government possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).
And last week, state or government endured the biggest losses as the stock fell by 6.1%.
Let's delve deeper into each type of owner of Hydro One, beginning with the chart below.
See our latest analysis for Hydro One
What Does The Institutional Ownership Tell Us About Hydro One?
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.
As you can see, institutional investors have a fair amount of stake in Hydro One. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Hydro One's earnings history below. Of course, the future is what really matters.
Hedge funds don't have many shares in Hydro One. Looking at our data, we can see that the largest shareholder is Province of Ontario with 47% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 2.0% and 1.5%, of the shares outstanding, respectively.
After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.
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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of Hydro One
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.
Our information suggests that Hydro One Limited insiders own under 1% of the company. It is a very large company, so it would be surprising to see insiders own a large proportion of the company. Though their holding amounts to less than 1%, we can see that board members collectively own CA$15m worth of shares (at current prices). It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.
General Public Ownership
The general public-- including retail investors -- own 33% stake in the company, and hence can't easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.
Next Steps:
I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Take risks for example - Hydro One has 2 warning signs (and 1 which is a bit concerning) we think you should know about.
If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.
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.
