Power Finance Corporation Limited’s (NSE:PFC) 3.2% loss last week hit both individual investors who hold 56% as well as institutions

Every investor in Power Finance Corporation Limited (NSE:PFC) should know the most powerful shareholder groups. We can see that the state or government owns the lion’s share of the business with 56% ownership. In other words, the group faces the maximum upside potential (or downside risk).

While institutions holding 32% came under pressure after the market capitalization fell to ₹291 billion last week, the state or government suffered the most losses.

Let’s take a closer look at what different types of shareholders can tell us about Power Finance.

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

What does institutional ownership tell us about energy financing?

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 can see that Power Finance 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. If multiple institutions change their minds on a stock at the same time, you could see the stock price drop quickly. So it’s worth checking out Power Finance’s earnings history below. Of course, the future is what really matters.

Hedge funds don’t have a lot of shares in Power Finance. The company’s largest shareholder is India, with a 56% stake. This essentially means that they have considerable influence, if not absolute control, over the future of the company. Meanwhile, the second and third largest shareholders hold 8.0% and 5.0% of the outstanding shares respectively.

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

Energy Finance 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 Power Finance Corporation Limited own less than 1% of the company. This is a fairly large company, so it would be possible for board members to hold a significant stake in the company, without holding much proportional interest. In this case, they own around ₹8.5 million of shares (at current prices). It’s always good to see at least some insider ownership, but it might be worth checking to see if those insiders have sold.

General public property

With a 12% stake, the general public, consisting mainly of individual investors, has some influence over Power Finance. 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 Power Finance, we need to consider many other factors. Be aware that Power Finance displays 3 warning signs in our investment analysis and 2 of them are potentially serious…

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 the financial statements are dated. This may not be consistent with the annual report figures for the full year.

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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.