What does the ownership structure of Hardwoods Distribution Inc. (TSE: HDI) look like?

Every investor in Hardwoods Distribution Inc. (TSE:HDI) should know the most powerful shareholder groups. Insiders often own a large portion of younger, smaller companies, while larger companies tend to have institutions as shareholders. Companies that have been privatized tend to have low insider ownership.

With a market capitalization of C$1.1 billion, Hardwoods Distribution is a decent size, so it’s probably on the radar of institutional investors. Our analysis of societal ownership below shows that institutions own shares in society. Let’s dig deeper into each type of owner to learn more about Hardwoods Distribution.

Check out our latest analysis for Hardwoods Distribution

TSX:HDI Ownership Allocation February 2, 2022

What does institutional ownership tell us about the distribution of hardwoods?

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 Hardwoods Distribution 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 better to be wary of relying on the so-called validation that accompanies institutional investors. They are also sometimes wrong. It is not uncommon to see a sharp decline in the stock price if two large institutional investors attempt to sell a stock at the same time. So it’s worth checking out Hardwoods Distribution’s past earnings trajectory (below). Of course, keep in mind that there are other factors to consider as well.

earnings-and-revenue-growth
TSX:HDI Earnings and Revenue Growth February 2, 2022

Our data shows that hedge funds own 8.4% of Hardwoods Distribution. This catches my attention because hedge funds sometimes try to influence management or make changes that will create short-term shareholder value. Arbutus Distributors Ltd. is currently the largest shareholder of the company with 17% of the outstanding shares. Polar Asset Management Partners Inc. is the second largest shareholder with 8.4% of common stock and David Hughes owns approximately 1.4% of the company’s stock. Additionally, the company’s CEO, Robert Brown, directly owns 0.8% of the total shares outstanding.

A closer look at our ownership data shows that the top 25 shareholders collectively own less than half of the ledger, suggesting a large group of small shareholders where no single shareholder has a majority.

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 plenty of analysts covering the stock, so it might be interesting to see what they are predicting as well.

Insider ownership of Hardwoods Distribution

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

We can report that insiders hold shares in Hardwoods Distribution Inc. Its market capitalization is only C$1.1 billion, and insiders hold C$48 million of shares, in their own name. This shows at least some alignment. You can click here to see if these insiders have been buying or selling.

General public property

The general public, who are usually retail investors, hold a substantial 58% stake in Hardwoods Distribution, which suggests it is quite a popular stock. This level of ownership gives mainstream investors some power to influence key policy decisions such as board composition, executive compensation, and dividend payout ratio.

Private Company Ownership

We can see that private companies hold 17% of the issued shares. It’s hard to draw conclusions from this fact alone, so it’s worth investigating who owns these private companies. Sometimes insiders or other related parties have an interest in shares of a public company through a separate private company.

Next steps:

I find it very interesting to see who exactly owns a company. But to really get insight, we also need to consider other information. Take for example the ubiquitous specter of investment risk. We have identified 4 warning signs with Hardwoods Distribution (at least 2 which don’t sit well with us), and understanding them should be part of your investment process.

Ultimately 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 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.

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