Key Insights

• Insiders appear to have a vested interest in Westport Fuel Systems' growth, as seen by their sizeable ownership

• 50% of the business is held by the top 3 shareholders

• 13% of Westport Fuel Systems is held by Institutions

To get a sense of who is truly in control of Westport Fuel Systems Inc. (TSE:WPRT), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 46% to be precise, is individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).

So, insiders of Westport Fuel Systems have a lot at stake and every decision they make on the company’s future is important to them from a financial point of view.

In the chart below, we zoom in on the different ownership groups of Westport Fuel Systems.

Check out our latest analysis for Westport Fuel Systems

What Does The Institutional Ownership Tell Us About Westport Fuel Systems?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

As you can see, institutional investors have a fair amount of stake in Westport Fuel Systems. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Westport Fuel Systems' historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Westport Fuel Systems. Looking at our data, we can see that the largest shareholder is Kevin Douglas with 44% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 3.5% and 3.1%, of the shares outstanding, respectively.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Westport Fuel Systems

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our information suggests that insiders maintain a significant holding in Westport Fuel Systems Inc.. Insiders own CA$63m worth of shares in the CA$139m company. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 41% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Westport Fuel Systems. 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 1 warning sign for Westport Fuel Systems that you should be aware of before investing here.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com