Yahoo Finance Great week for Megaport Limited (ASX:MP1) institutional investors after losing 50% over the previous year
To get a sense of who is truly in control of Megaport Limited (ASX:MP1), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 54% to be precise, is institutions. Put another way, the group faces the maximum upside potential (or downside risk).
Institutional investors would appreciate the 21% increase in share prices last week, given their one-year returns have been disappointing at 50%.
Let's delve deeper into each type of owner of Megaport, beginning with the chart below.
See our latest analysis for Megaport
What Does The Institutional Ownership Tell Us About Megaport?
Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.
As you can see, institutional investors have a fair amount of stake in Megaport. 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 Megaport, (below). Of course, keep in mind that there are other factors to consider, too.
Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. We note that hedge funds don't have a meaningful investment in Megaport. Looking at our data, we can see that the largest shareholder is First Sentier Investors (Australia) IM Ltd with 10% of shares outstanding. Firetrail Investments Pty Ltd is the second largest shareholder owning 7.1% of common stock, and Capital Research and Management Company holds about 5.2% of the company stock. In addition, we found that Vincent English, the CEO has 0.6% of the shares allocated to their name.
A closer look at our ownership figures suggests that the top 12 shareholders have a combined ownership of 51% implying that no single shareholder has a majority.
While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
Insider Ownership Of Megaport
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.
I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.
We can report that insiders do own shares in Megaport Limited. It has a market capitalization of just AU$1.3b, and insiders have AU$86m worth of shares, in their own names. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.
General Public Ownership
With a 39% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Megaport. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Megaport better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Megaport you should be aware of.
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.
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