IWG plc (LON:IWG) share price fell 13% last week; individual investors would not be happy

To get an idea of ​​who really controls IWG plc (LON: IWG), it is important to understand the ownership structure of the business. The group holding the largest number of shares in the company, around 29% to be precise, are made up of individual investors. In other words, the group faces the maximum upside potential (or downside risk).

While insiders, who own 29% of the shares, were not spared by the £335m market capitalization drop last week, individual investors as a group suffered the maximum losses

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

See our latest analysis for IWG

LSE: Distribution of ownership of IWG on June 14, 2022

What does institutional ownership tell us about IWG?

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 IWG 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 IWG’s revenue and historical earnings below, but keep in mind there’s always more to tell.

earnings-and-revenue-growth
LSE: IWG Earnings and Revenue Growth June 14, 2022

It appears that hedge funds own 15% of IWG’s shares. This is worth noting, as hedge funds are often quite active investors, who may try to influence management. Many want value creation (and a rise in share price) in the short to medium term. The company’s CEO, Mark Dixon, is the largest shareholder with 29% of the shares outstanding. With respectively 15% and 5.0% of the outstanding shares, Toscafund Asset Management LLP and Schroder Investment Management Limited are the second and third shareholders.

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 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 are a reasonable number of analysts covering the stock, so it might be useful to know their overall view on the future.

IWG Insider Ownership

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.

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.

Our most recent data indicates that insiders own a reasonable proportion of IWG plc. Insiders hold £622million worth of shares in the £2.2billion UK company. It is quite significant. Most would be delighted to see the board investing alongside them. You may want to access this free chart showing recent insider trades.

General public property

With a 29% stake, the general public, made up mostly of individual investors, has some influence over IWG. Although this group may not necessarily make the decisions, they can certainly have a real influence on the way the business is run.

Next steps:

It is always useful to think about the different groups that own shares in a company. But to better understand IWG, we need to consider many other factors. To this end, you should be aware of the 1 warning sign we spotted with IWG.

But finally it’s the future, not the past, which will determine the performance of the owners of this company. Therefore, we think it’s advisable to take a look at this free report showing whether analysts are predicting a brighter 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.

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.

Karen J. Nelson