Frequentis AG (ETR:FQT) share price fell 12% last week; private companies would not be happy

Every investor in Frequentis AG (ETR:FQT) should know the most powerful shareholder groups. We can see that private companies hold the lion’s share of the business with 60% ownership. That is, the group will benefit the most if the stock goes up (or lose the most if there is a downturn).

And last week, private companies suffered the biggest losses, with the stock dropping 12%.

In the table below, we zoom in on the different Frequentis ownership groups.

Discover our latest analysis for Frequentis

XTRA:FQT Ownership Breakdown September 10, 2022

What does institutional ownership tell us about Frequentis?

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.

As you can see, institutional investors hold a sizeable share of Frequentis. This implies that analysts working for these institutions have reviewed the stock and like it. But like everyone else, they can be wrong. 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 Frequentis’ past revenue trajectory (below). Of course, keep in mind that there are other factors to consider as well.

XTRA: FQT Earnings and Revenue Growth September 10, 2022

We note that hedge funds have no significant investment in Frequentis. Our data shows that Frequentis Group Holding GmbH is the largest shareholder with 60% of outstanding shares. With such a stake in ownership, we infer that they have significant control over the future of the business. With respectively 10.0% and 8.0% of the outstanding shares, B & C Industrieholding GmbH and Johannes Bardach are the second and third shareholders. Johannes Bardach, who is the third shareholder, also bears the title of Chairman of the Supervisory Board.

While studying the institutional ownership of a company can add value to your research, it is also recommended that you research analyst recommendations to better understand a stock’s expected performance. A number of analysts cover the stock, so you can look at growth forecasts quite easily.

Frequentis Insider Ownership

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

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 most recent data indicates that insiders hold certain shares of Frequentis AG. As individuals, insiders collectively own €27 million of the €334 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

The general public, generally individual investors, holds 16% of the capital of Frequentis. Although this group may not necessarily make the decisions, they can certainly have a real influence on the way the business is run.

Private equity ownership

The private equity firms hold a 10.0% stake in Frequentis. This suggests that they can influence key policy decisions. Sometimes we see private capital sticking around for the long haul, but generally they have a shorter investment horizon and, as the name suggests, don’t invest heavily in public companies. After a while, they may look to sell and redeploy capital elsewhere.

Private Company Ownership

Our data indicates that private companies own 60% of the shares of society. 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. To this end, you should be aware of the 1 warning sign we spotted with Frequentis.

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