key insights
The large holdings of Insignia Financial by financial institutions means that they have a large influence on the company’s stock price.
53% of the business is owned by the top 7 shareholders
Insiders have recently bought
Every investor in Insignia Financial Ltd. (ASX:IFL) should be aware of the most powerful shareholder groups. And the groups that hold the biggest piece of the pie are institutions with 60% ownership. That is, if the stock price rises, the group will gain the most (or if the stock price falls, it will suffer the maximum loss).
As a result, institutional investors made the biggest gains after the company’s stock price rose 4.3% last week. The one-year return on investment is currently 17%, so last week’s rise would have been rather welcome.
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.
Ownership breakdown
What does institutional ownership tell us about Insignia Financial?
Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they usually consider buying larger companies that are included in the relevant benchmark index.
As you can see, institutional investors have a fair amount of stock in Insignia Financial. 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. If multiple financial institutions change their view on a stock at the same time, you could see the stock price drop fast. It is therefore worth checking Insignia Financial’s earnings history, below. Of course, what really matters is the future.
Profit and revenue growth
Institutional investors own over 50% of a company, so when they come together they can strongly influence board decisions. Insignia Financial is not owned by hedge funds. Our data shows that Tanarra Capital Australia Pty Ltd is the largest shareholder with 14% of shares outstanding. Host-Plus Pty. Limited is the second largest shareholder owning 9.0% of the common stock and Australian Retirement Trust Pty Ltd holds approximately 8.1% of the company’s stock.
On further digging, we found that more than half of the company’s shares are owned by the top 7 shareholders. This suggests that the interests of large shareholders are balanced to some extent by small shareholders.
While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are a significant number of analysts covering this stock, so it might be useful to know their aggregate forecast for the future.
story continues
Insider ownership in Insignia Financial
The precise definition of an insider can be subjective, but almost everyone considers board members to be insiders. Management ultimately answers to the board. However, it is not uncommon for managers to be members of the board of directors. This is especially true if the manager is the founder or CEO.
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.
We can see that insiders own shares in Insignia Financial Ltd. Insignia Financial Ltd. is a fairly large company, so it’s generally positive to see a potentially meaningful collaboration. In this case, they own around AU$125m worth of shares (at current prices). If you want to know more about insider alignment issues, click here to see if insiders have been buying or selling.
Open to the public
With an 18% stake, the general public (mainly retail investors) has some influence over Insignia Financial. 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 and are positioned to play a role in shaping the company’s strategy, which focuses on value creation. 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:
It’s always worth thinking about the different groups who own shares in a company. But to understand Insignia Financial better, you need to consider many other factors.
I like to dig deep into how companies have performed in the past. Get free access to interactive graphs of historical earnings, revenue and cash flow.
But ultimately it is the future, not the past, that will determine how well the owners of this business will do. So we might consider this free report showing whether analysts are predicting a bright future.
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 articles are not intended to be 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.
