After losing 5.5% in the past year, West Fraser Timber Co. Ltd. (TSE:WFG) institutional owners must be relieved by the recent gain
Key Insights
Given the large stake in the stock by institutions, West Fraser Timber's stock price might be vulnerable to their trading decisions
51% of the business is held by the top 9 shareholders
A look at the shareholders of West Fraser Timber Co. Ltd. (TSE:WFG) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are institutions with 45% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
Last week's CA$421m market cap gain would probably be appreciated by institutional investors, especially after a year of 5.5% losses.
In the chart below, we zoom in on the different ownership groups of West Fraser Timber.
See our latest analysis for West Fraser Timber
What Does The Institutional Ownership Tell Us About West Fraser Timber?
Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.
As you can see, institutional investors have a fair amount of stake in West Fraser Timber. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at West Fraser Timber's earnings history below. Of course, the future is what really matters.
We note that hedge funds don't have a meaningful investment in West Fraser Timber. Looking at our data, we can see that the largest shareholder is The Jim Pattison Group, Inc. with 11% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 10% and 8.5%, of the shares outstanding, respectively.
We did some more digging and found that 9 of the top shareholders account for roughly 51% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.
While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of West Fraser Timber
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.
Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.
Shareholders would probably be interested to learn that insiders own shares in West Fraser Timber Co. Ltd.. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around CA$159m worth of shares (at current prices). Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.
General Public Ownership
With a 21% ownership, the general public, mostly comprising of individual investors, have some degree of sway over West Fraser Timber. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.
Private Company Ownership
Our data indicates that Private Companies hold 32%, of the company's shares. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important.
I always like to check for a history of revenue growth. You can too, by accessing this free chart of historic revenue and earnings in this detailed graph.
Ultimately the future is most important. You can access this free report on analyst forecasts for the company.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
