key insights
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Significantly high institutional ownership means Insignia Financial's share price is sensitive to trading activity
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A total of 7 investors hold a majority stake in the company, holding 54% of the ownership.
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Analyst forecast data, combined with ownership research, can help you better assess a company's future performance.
Every investor in Insignia Financial Ltd. (ASX:IFL) should be aware of the most powerful shareholder groups. The group that owns the most shares in the company (around 64% to be exact) is institutional investors. In other words, this group faces the greatest upside potential (or downside risk).
Given the vast amounts of capital and research power at their disposal, institutional ownership tends to be particularly heavy for retail investors. As a result, large amounts of institutional funds invested in a company are generally considered a positive attribute.
Let's take a closer look to see what the different types of shareholders can tell us about Insignia Financial.
Check out our latest analysis for Insignia Financial.
What does institutional ownership tell us about Insignia Financial?
Institutions typically measure a stock against a benchmark when reporting to their own investors, so enthusiasm for a stock often increases once it's included in a major index. We would expect most companies to have some institutions on their register, especially if they are growing.
Insignia Financial already has a share registry. In fact, they own a significant stake in the company. This suggests some credibility among professional investors. But we can't rely on that fact alone because institutions make bad investments sometimes, just like everyone does. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. If such a trade goes wrong, multiple parties may compete to sell stock quickly. This risk is higher for companies without a history of growth. You can see Insignia Financial's historic earnings and revenue below, but keep in mind there's always more to the story.
Institutional investors own more than half of the outstanding shares, so the board will need to pay attention to their preferences. Hedge funds don't have many shares in Insignia Financial. The company's largest shareholder is Tanarra Capital Australia Pty Ltd, with an ownership of 14%. Holding 9.1% and 8.2% of the shares outstanding, Host-Plus Pty. Limited and Australian Retirement Trust Pty Ltd are the second and third largest shareholders, respectively.
On closer inspection, we found that more than half of the company's shares are owned by the top 7 shareholders, suggesting that the interests of large shareholders are balanced out to some extent by smaller shareholders.
Researching institutional ownership is a good way to assess and filter a stock's expected performance. The same can be done by studying analyst sentiment. There are plenty of analysts covering the stock, so it might be worth seeing what they are predicting.
Insider ownership in Insignia Financial
The precise definition of an insider can be subjective, but almost everyone considers board members to be insiders. The answers of company management to the board of directors and the latter must represent the interests of shareholders. In particular, top-level managers may serve on the board themselves.
Insider ownership is positive when it signals leaders 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 depending on the situation.
Our most recent data indicates that insiders own a portion of Insignia Financial Ltd. stock. This is a big company, so it's good to see this level of collaboration. Insiders say he owns AU$116m worth of shares (at current prices). It's good to see this level of investment by insiders. Here you can see if insiders have been buying recently.
Open to the public
The general public, including retail investors, owns 14% of the company, so they can't be easily ignored. Although this size of ownership is significant, it may not be enough to change company policy if the decision is not aligned with other large shareholders.
private equity ownership
Private equity firms hold a 14% stake in Insignia Financial. This suggests that they can influence important policy decisions. Some may like this because private equity can be activists who hold management accountable. However, private equity can also be sold by taking a company public.
Next steps:
I think it would be very interesting to see who exactly owns the company. But to really gain insight, you need to consider other information as well. Please note that Insignia Financial is listed 1 warning sign in investment analysis you should know…
after all the future is most important.You can access this free A report on analyst forecasts for a company.
Note: The numbers in this article are calculated using data from the previous 12 months and refer to the 12-month period ending on the last day of the month in which the financial statements are dated. This may not match the 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 using only unbiased methodologies, and the articles are not intended as financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
