Following Prosafe SE’s (OB:PRS) latest kr302m market cap drop, institutional owners may be forced to take tough action

To get an idea of ​​who actually controls Prosafe SE (OB:PRS), it is important to understand the ownership structure of the company. We can see that institutions hold the lion’s share of the business with 57% ownership. In other words, the group is likely to gain the most (or lose the most) from its investment in the business.

And institutional investors suffered the highest losses after the company’s share price fell 16% last week. The recent loss, on top of an 85% year-on-year loss to shareholders, may not be suitable for this group of investors. Often referred to as “market makers,” institutions wield significant power in influencing the price dynamics of any stock. Therefore, if Prosafe’s share price weakness persists, institutional investors may feel compelled to sell the stock, which may not be ideal for individual investors.

Let’s dig deeper into each type of Prosafe owner, starting with the table below.

Check out our latest analysis for Prosafe

OB: PRS Ownership Breakdown September 24, 2022

What does institutional ownership tell us about Prosafe?

Institutional investors typically compare their own returns to the returns of a commonly tracked index. They therefore generally consider buying larger companies that are included in the relevant benchmark.

We can see that Prosafe 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 Prosafe’s revenue and historical earnings below, but keep in mind there’s always more to tell.

earnings-and-revenue-growth
OB:PRS Earnings and Revenue Growth September 24, 2022

Since institutional investors own more than half of the issued shares, the board will likely have to pay attention to their preferences. Hedge funds don’t have a lot of shares in Prosafe. DNB Asset Management AS is currently the company’s largest shareholder with 14% of the outstanding shares. North Sea Strategic Investments is the second largest shareholder with 14% of ordinary shares and Nordea Investment Management AB owns around 12% of the company’s shares.

To make our study more interesting, we found that the top 4 shareholders control more than half of the company, which implies that this group has a considerable influence on the decision-making of the company.

While it makes sense to study data on a company’s institutional ownership, it also makes sense to study analyst sentiment to find out which way the wind is blowing. There is a little analyst coverage of the stock, but not much. So there is room for him to gain coverage.

Prosafe Insider Ownership

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

I generally consider insider ownership to be a good thing. However, there are times when it is more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own less than 1% of Prosafe SE. But they may have an indirect interest through a corporate structure that we have not noted. It seems that the board of directors holds about 4.2 million kr of shares. This compares to a market capitalization of 1.6 billion kr. Many tend to prefer to see a board with larger holdings. A good next step might be to take a look at this free summary of insider buying and selling.

General public property

The general public, including retail investors, owns 39% of the company’s capital and therefore cannot be easily ignored. Although this group may not necessarily make the decisions, they can certainly have a real influence on the way the business is run.

Private Company Ownership

Private companies appear to own 4.2% of Prosafe shares. It might be worth exploring this further. If related parties, such as insiders, have an interest in any of these private companies, this should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next steps:

While it is worth considering the different groups that own a business, there are other, even more important factors. Be aware that Prosafe displays 5 warning signs in our investment analysis and 4 of them are significant…

At the end of the day the future is the most important. You can access this free analyst forecast report for the company.

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 the financial statements are 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 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.

Valuation is complex, but we help make it simple.

Find out if Prosafe is potentially overvalued or undervalued by viewing our full analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.

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