Could the ownership structure of Sandvik AB (publ) (STO:SAND) tell us anything useful?

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Every investor in Sandvik AB (publ) (STO:SAND) should know the most powerful shareholder groups. Institutions often own shares in more established companies, while it is not uncommon to see insiders owning a good number of smaller companies. Companies that were previously publicly owned tend to have less insider ownership.

Sandvik is a fairly large company. It has a market capitalization of 260 billion kr. Normally, institutions own a significant share of a business of this size. In the graph below, we can see that the institutions own shares in the company. Let’s take a closer look at what different types of shareholders can tell us about Sandvik.

Discover our latest analysis for Sandvik

OM:SAND Ownership Breakdown June 3, 2022

What does institutional ownership tell us about Sandvik?

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 see that Sandvik has institutional investors; and they own a good part of the shares of the company. This suggests some credibility with professional investors. But we cannot rely solely on this fact since institutions sometimes make bad investments, like everyone else. It is not uncommon to see a sharp decline in the stock price if two large institutional investors attempt to sell a stock at the same time. So it’s worth checking Sandvik’s past earnings trajectory (below). Of course, keep in mind that there are other factors to consider as well.

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OM:SAND Earnings and Revenue Growth June 3, 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 Sandvik. Looking at our data, we can see that the major shareholder is AB Industrivärden (publ) with 13% of the outstanding shares. In comparison, the second and third shareholders hold around 4.5% and 3.4% of the shares.

Our studies suggest that the top 25 shareholders collectively control less than half of the company’s shares, which means that the company’s shares are widely distributed and there is no dominant shareholder.

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 plenty of analysts covering the stock, so it might be interesting to see what they are predicting as well.

Sandvik Insider Ownership

The definition of an insider may differ slightly from country to country, but board members still matter. 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.

Our information suggests that insiders of Sandvik AB (publ) own less than 1% of the company. As this is a large company, we expect insiders to own only a small percentage. But it should be noted that they hold for 220 million kr of shares. In this kind of situation, it may be more interesting to see whether these insiders have been buying or selling.

General public property

With a 39% stake, the general public, consisting mainly of individual investors, has some influence over Sandvik. While this size of ownership may not be enough to sway a policy decision in their favor, they can still have a collective impact on company policies.

Next steps:

I find it very interesting to see who exactly owns a company. But to really get insight, we also need to consider other information. Example: we have identified 1 warning sign for Sandvik you should be aware.

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 in which 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.

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