This is what the shareholding structure of Babcock & Wilcox Enterprises, Inc. (NYSE:BW) looks like
Every investor in Babcock & Wilcox Enterprises, Inc. (NYSE: BW) should know the most powerful shareholder groups. Big companies usually have institutions as shareholders, and we usually see insiders owning shares in small companies. We also tend to see a decline in insider participation in companies that were previously public.
Babcock & Wilcox Enterprises is not a large company by world standards. It has a market cap of US$637 million, which means it wouldn’t get the attention of many institutional investors. Looking at our ownership group data (below), it appears that institutions own shares in the company. Let’s take a closer look at what different types of shareholders can tell us about Babcock & Wilcox Enterprises.
See our latest analysis for Babcock & Wilcox Enterprises
What does institutional ownership tell us about Babcock & Wilcox Enterprises?
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.
We can see that Babcock & Wilcox Enterprises has institutional investors; and they own a good part of the shares of the company. This implies that analysts working for these institutions have reviewed the stock and like it. But like everyone else, they can be wrong. When multiple institutions hold a stock, there is always a risk that they are in a “crowded trade”. When such a transaction goes wrong, multiple parties may compete to quickly sell shares. This risk is higher in a company with no history of growth. You can see Babcock & Wilcox Enterprises historic earnings and revenue below, but keep in mind there’s always more to tell.
Hedge funds don’t have a lot of shares in Babcock & Wilcox Enterprises. B. Riley Securities, Inc. is currently the largest shareholder, with 13% of the shares outstanding. For context, the second shareholder owns approximately 6.7% of the outstanding shares, followed by a 6.3% ownership by the third shareholder. Additionally, we found that Kenneth Young, the CEO, owns 1.1% of the shares awarded in his name.
Looking at the shareholder register, we can see that 50% of the ownership is controlled by the 13 major shareholders, which means that no shareholder has a controlling interest in the ownership.
Institutional ownership research is a good way to assess and filter the expected performance of a stock. The same can be obtained by studying the feelings of the analyst. There are a reasonable number of analysts covering the stock, so it might be useful to know their overall view on the future.
Insider ownership of Babcock & Wilcox Enterprises
The definition of company insiders can be subjective and varies from jurisdiction to jurisdiction. Our data reflects individual insiders, capturing at least board members. The management of the company answers to the board of directors and the latter must represent the interests of the shareholders. In particular, sometimes the senior executives themselves sit on the board of directors.
Most view insider ownership as a positive because it can indicate that the board is well aligned with other shareholders. However, there are times when too much power is concentrated within this group.
We can see that insiders own shares in Babcock & Wilcox Enterprises, Inc. As individuals, insiders collectively own $18 million of the $637 million company. Some would say this shows the alignment of interests between shareholders and the board. But it might be worth checking to see if these insiders have sold.
General public property
With a 35% stake, the general public, consisting mainly of individual investors, has some influence over Babcock & Wilcox Enterprises. This size of ownership, although considerable, may not be sufficient to change company policy if the decision is not in line with other large shareholders.
Private Company Ownership
It appears that private companies hold 13% of the shares of Babcock & Wilcox Enterprises. It’s hard to draw conclusions from this fact alone, so it’s worth investigating who owns these private companies. Sometimes insiders or other related parties have an interest in shares of a public company through a separate private company.
While it is worth considering the different groups that own a business, there are other, even more important factors. Take for example the ubiquitous specter of investment risk. We have identified 4 warning signs with Babcock & Wilcox Enterprises (at least 2 that should not be ignored), and understanding them should be part of your investment process.
If you’re like me, you might want to ask yourself if this business will grow or shrink. Luckily, you can check out this free report showing analyst predictions for its future.
NB: The figures in this article are calculated using trailing twelve month data, which refers to the 12 month period ending on the last day of the month in which the financial statements are dated. This may not be consistent with the annual report figures for the full year.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.