Given the large stake in the stock by institutions, Scully Royalty's stock price might be vulnerable to their trading decisions
A total of 2 investors have a majority stake in the company with 59% ownership
Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock
To get a sense of who is truly in control of Scully Royalty Ltd. (NYSE:SRL), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are institutions with 43% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
Given the vast amount of money and research capacities at their disposal, institutional ownership tends to carry a lot of weight, especially with individual investors. Hence, having a considerable amount of institutional money invested in a company is often regarded as a desirable trait.
In the chart below, we zoom in on the different ownership groups of Scully Royalty.
What Does The Institutional Ownership Tell Us About Scully Royalty?
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.
Scully Royalty already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Scully Royalty's earnings history below. Of course, the future is what really matters.
NYSE:SRL Earnings and Revenue Growth April 27th 2024
Scully Royalty is not owned by hedge funds. Our data shows that Kellanova is the largest shareholder with 36% of shares outstanding. For context, the second largest shareholder holds about 23% of the shares outstanding, followed by an ownership of 14% by the third-largest shareholder.
After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.
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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.
Insider Ownership Of Scully Royalty
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.
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 information suggests that Scully Royalty Ltd. insiders own under 1% of the company. It has a market capitalization of just US$100m, and the board has only US$952k worth of shares in their own names. We generally like to see a board more invested. However it might be worth checking if those insiders have been buying.
General Public Ownership
With a 20% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Scully Royalty. 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
Public companies currently own 36% of Scully Royalty stock. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.
Next Steps:
I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 2 warning signs for Scully Royalty you should be aware of, and 1 of them makes us a bit uncomfortable.
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.
Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
