Could the ownership structure of Preformed Line Products (NASDAQ:PLPC) tell us anything useful?
Every investor in Preformed Line Products Company (NASDAQ:PLPC) should know the most powerful shareholder groups. Institutions often own shares in more established companies, while it is not uncommon to see insiders owning a good number of smaller companies. I like to see at least a little insider ownership. As Charlie Munger said “Show me the incentive and I’ll show you the result”.
Preformed Line Products is a small company with a market capitalization of US$300 million, so it may still fly under the radar of many institutional investors. Our analysis of company ownership, below, shows that the institutions are visible on the share register. Let’s take a closer look at what different types of shareholders can tell us about Preformed Line Products.
See our latest analysis for preformed line products
What does institutional ownership tell us about the products of the preformed line?
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 Preformed Line Products has institutional investors; and they own a good part of the shares of the company. This may indicate that the company has some degree of credibility in the investment community. However, it is best to be wary of relying on the so-called validation that accompanies institutional investors. They are also sometimes 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 Preformed Line Products’ revenue and historical revenue below, but keep in mind there’s always more to tell.
We note that hedge funds have no significant investment in preformed range products. The company’s largest shareholder is Barbara Ruhlman, with a 29% stake. In comparison, the second and third shareholders hold approximately 6.9% and 4.6% of the shares. Robert Ruhlman, who is the third shareholder, also holds the title of Chairman of the Board.
Upon closer inspection, we found that more than half of the company’s shares are held by the top 6 shareholders, suggesting that the interests of the larger shareholders are to some extent balanced by those of the smaller ones.
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. As far as we can tell, there’s no analyst coverage of the company, so it’s probably flying under the radar.
Insider Ownership of Preformed Products
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 runs the company, but the CEO will answer to the board of directors, even if he is a member of it.
I generally consider insider ownership to be a good thing. However, there are times when it is more difficult for other shareholders to hold the board accountable for decisions.
Our information suggests that insiders hold a significant stake in Preformed Line Products Company. Insiders hold a $120 million stake in this $300 million company. This may suggest that the founders still own a lot of shares. You can click here to see if they bought or sold.
General public property
The general public, who are usually individual investors, hold a 17% stake in Preformed Line Products. Although this group may not necessarily make the decisions, they can certainly have a real influence on the way the business is run.
It is always useful to think about the different groups that own shares in a company. But to better understand preformed products, we need to consider many other factors.
I like to dive deeper on the performance of a company in the past. You can access this interactive chart past earnings, income and cash flow, for free.
If you’d rather check out another company – one with potentially superior finances – then don’t miss this free list of interesting companies, supported by solid financial data.
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.