Yahoo Finance Public companies are TransAlta Renewables Inc.'s (TSE:RNW) biggest owners and were rewarded after market cap rose by CA$133m last week
Key Insights
Significant control over TransAlta Renewables by public companies implies that the general public has more power to influence management and governance-related decisions
The largest shareholder of the company is TransAlta Corporation with a 60% stake
Every investor in TransAlta Renewables Inc. (TSE:RNW) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 60% to be precise, is public companies. Put another way, the group faces the maximum upside potential (or downside risk).
As a result, public companies were the biggest beneficiaries of last week’s 4.1% gain.
Let's take a closer look to see what the different types of shareholders can tell us about TransAlta Renewables.
Check out our latest analysis for TransAlta Renewables
What Does The Institutional Ownership Tell Us About TransAlta Renewables?
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.
TransAlta Renewables already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 TransAlta Renewables, (below). Of course, keep in mind that there are other factors to consider, too.
TransAlta Renewables is not owned by hedge funds. Our data shows that TransAlta Corporation is the largest shareholder with 60% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. The Vanguard Group, Inc. is the second largest shareholder owning 1.4% of common stock, and BMO Asset Management Inc. holds about 1.4% of the company stock.
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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of TransAlta Renewables
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
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 TransAlta Renewables Inc. insiders own under 1% of the company. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own CA$565k worth of shares. It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.
General Public Ownership
The general public-- including retail investors -- own 29% 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.
Public Company Ownership
We can see that public companies hold 60% of the TransAlta Renewables shares on issue. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.
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. Be aware that TransAlta Renewables is showing 2 warning signs in our investment analysis , and 1 of those is a bit concerning...
But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.
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.
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