Yahoo Finance While institutions own 38% of carsales.com Ltd (ASX:CAR), individual investors are its largest shareholders with 57% ownership
Key Insights
The considerable ownership by individual investors in carsales.com indicates that they collectively have a greater say in management and business strategy
A total of 25 investors have a majority stake in the company with 40% ownership
To get a sense of who is truly in control of carsales.com Ltd (ASX:CAR), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual investors with 57% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
Institutions, on the other hand, account for 38% of the company's stockholders. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies.
In the chart below, we zoom in on the different ownership groups of carsales.com.
See our latest analysis for carsales.com
What Does The Institutional Ownership Tell Us About carsales.com?
Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.
carsales.com already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at carsales.com's earnings history below. Of course, the future is what really matters.
Hedge funds don't have many shares in carsales.com. Bennelong Funds Management Ltd. is currently the largest shareholder, with 8.1% of shares outstanding. With 5.0% and 4.6% of the shares outstanding respectively, Aware Super Pty Ltd and State Street Global Advisors, Inc. are the second and third largest shareholders.
On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.
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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of carsales.com
The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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 carsales.com Ltd. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around AU$403m worth of shares (at current prices). Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.
General Public Ownership
The general public -- including retail investors -- own 57% of carsales.com. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand carsales.com better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 4 warning signs for carsales.com (of which 2 can't be ignored!) you should know about.
If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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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