1&1 AG's (ETR:1U1) top owners are public companies with 78% stake, while 15% is held by individual investors

editorial-team@simplywallst.com (Simply Wall St)

Thu, Nov 7, 2024, 6:01 AM 4 min read

The considerable ownership by public companies in 1&1 indicates that they collectively have a greater say in management and business strategy
78% of the company is held by a single shareholder (United Internet AG)
Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock

A look at the shareholders of 1&1 AG (ETR:1U1) can tell us which group is most powerful. We can see that public companies own the lion's share in the company with 78% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Individual investors, on the other hand, account for 15% of the company's stockholders.

Let's delve deeper into each type of owner of 1&1, beginning with the chart below.

See our latest analysis for 1&1

ownership-breakdown — XTRA:1U1 Ownership Breakdown November 7th 2024

What Does The Institutional Ownership Tell Us About 1&1?

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.

We can see that 1&1 does have institutional investors; and they hold a good portion of the company's stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of 1&1, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth — XTRA:1U1 Earnings and Revenue Growth November 7th 2024

We note that hedge funds don't have a meaningful investment in 1&1. The company's largest shareholder is United Internet AG, with ownership of 78%. This implies that they have majority interest control of the future of the company. Meanwhile, the second and third largest shareholders, hold 1.6% and 1.0%, of the shares outstanding, respectively.

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 1&1

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our most recent data indicates that insiders own less than 1% of 1&1 AG. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own €2.7m worth of shares. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public-- including retail investors -- own 15% stake in the company, and hence can't easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Public Company Ownership

It appears to us that public companies own 78% of 1&1. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should be aware of the 1 warning sign we've spotted with 1&1 .

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

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.