What does the ownership structure of Encore Wire Corporation (NASDAQ:WIRE) look like?
If you want to know who actually controls Encore Wire Corporation (NASDAQ:WIRE), then you’ll need to look at the composition of its share register. Big companies usually have institutions as shareholders, and we usually see insiders owning shares in small companies. Companies that have been privatized tend to have low insider ownership.
Encore Wire has a market capitalization of US$2.4 billion, so we expect some institutional investors to have taken notice of the stock. Looking at our ownership group data (below), it appears that institutional investors have bought the company. We can zoom in on the different ownership groups, to learn more about Encore Wire.
What does institutional ownership tell us about Encore Wire?
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 Encore Wire 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. 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 Encore Wire’s revenue history below. Of course, the future is what really matters.
Since institutional investors own more than half of the issued shares, the board will likely have to pay attention to their preferences. Encore Wire is not owned by hedge funds. The company’s largest shareholder is BlackRock, Inc., with a 15% stake. With 11% and 7.5% of shares outstanding, respectively, The Vanguard Group, Inc. and Dimensional Fund Advisors LP are the second and third largest shareholders. Additionally, we found that Daniel Jones, the CEO, owns 2.7% of the shares attributed to his name.
Upon closer inspection, we found that more than half of the company’s shares are held by the top 10 shareholders, suggesting that the interests of larger shareholders are to some extent balanced by those of smaller ones.
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. Although there is some analyst coverage, the company is probably not widely covered. So it could attract more attention, on the track.
Encore Wire 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 runs the company, but the CEO will answer to the board of directors, even if he is a member of it.
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.
Shareholders would likely be interested to learn that insiders hold shares of Encore Wire Corporation. It’s a pretty big company, so it’s generally a positive to see a potentially meaningful alignment. In this case, they own about $87 million worth of stock (at today’s prices). If you want to explore the issue of insider alignment, you can click here to see if insiders have been buying or selling.
General public property
The general public, including retail investors, owns 11% of the company’s capital and therefore cannot be easily ignored. This size of ownership, although considerable, may not be sufficient to change company policy if the decision is not in line with other large shareholders.
I find it very interesting to see who exactly owns a business. But to really get insight, we also need to consider other information. Take for example the ubiquitous specter of investment risk. We have identified 3 warning signs with Encore Wire (at least 2 of which are a little nasty), and understanding them should be part of your investment process.
If you’re like me, you might want to ask yourself if this business will grow or shrink. Luckily, you can check out this free report showing analyst predictions for its 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.
Feedback on this article? Concerned about content? Get in touch with us directly. You can also email the editorial team (at) Simplywallst.com.
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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.