ForFarmers NV (AMS:FFARM) share price fell 10% last week; private companies would not be happy

If you want to know who actually controls ForFarmers NV (AMS:FFARM), then you will need to look at the composition of its share ledger. With 49% of the capital, private companies hold the maximum shares in the company. In other words, the group is likely to gain the most (or lose the most) from its investment in the business.

And last week, private companies suffered the biggest losses, with the stock dropping 10%.

In the table below we zoom in on the different ownership groups of ForFarmers.

If you are not interested in researching the ownership structure of FFARM, we have a free list of interesting investment ideas to potentially inspire your next investment!

ENXTAM: FFARM Property Breakdown September 27, 2022

What does institutional ownership tell us about ForFarmers?

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.

ForFarmers already has institutions on the share register. Indeed, they hold a respectable stake in 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. 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 ForFarmers’ revenue and historical earnings below, but keep in mind there’s always more to tell.

earnings-and-revenue-growth
ENXTAM: FFARM Earnings and Revenue Growth September 27, 2022

Hedge funds don’t have a lot of shares in ForFarmers. Looking at our data, we can see that the main shareholder is Coöperatie FromFarmers UA with 49% of the outstanding shares. Stichting Beheer- In Administratiekantoor, Endowment Arm is the second largest shareholder with 8.9% of ordinary shares, and Dirk Lindenbergh owns around 5.2% of company shares.

A more detailed study of the shareholder register showed us that 2 of the main shareholders hold a considerable stake in the company, via their 58% stake.

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 some analyst coverage of the stock, but it could still become better known over time.

Insider Ownership of ForFarmers

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management is ultimately responsible to the board of directors. However, it is not uncommon for managers to be members of the management board, especially if they are founders or CEOs.

Insider ownership is positive when it signals that executives think like the true owners of the company. However, strong insider ownership can also give immense power to a small group within the company. This can be negative in certain circumstances.

We can see that insiders hold shares in ForFarmers NV. As individuals, insiders collectively own €13 million of the €223 million company. It’s good to see insider investing, but it might be worth checking to see if those insiders have been buying.

General public property

The general public, including retail investors, owns 26% of the company’s capital and therefore cannot be easily ignored. This size of ownership, although considerable, may not be sufficient to change company policy if the decision is not in line with other major shareholders.

Private Company Ownership

We can see that private companies hold 49% of the shares issued. 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.

Next steps:

I find it very interesting to see who exactly owns a business. But to really get insight, we also need to consider other information. Example: we have identified 2 warning signs for ForFarmers you should know, and one of them makes us a little uneasy.

If you prefer to find out what analysts are predicting in terms of future growth, don’t miss this free analyst forecast report.

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.

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Karen J. Nelson