Given the large stake in the stock by institutions, Nick Scali's stock price might be vulnerable to their trading decisions
51% of the business is held by the top 12 shareholders
Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company
Every investor in Nick Scali Limited (ASX:NCK) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are institutions with 44% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
Since institutional have access to huge amounts of capital, their market moves tend to receive a lot of scrutiny by retail or individual investors. Hence, having a considerable amount of institutional money invested in a company is often regarded as a desirable trait.
Let's take a closer look to see what the different types of shareholders can tell us about Nick Scali.
What Does The Institutional Ownership Tell Us About Nick Scali?
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.
We can see that Nick Scali does have institutional investors; and they hold a good portion of the company's stock. 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 Nick Scali's earnings history below. Of course, the future is what really matters.
ASX:NCK Earnings and Revenue Growth December 30th 2024
Hedge funds don't have many shares in Nick Scali. Looking at our data, we can see that the largest shareholder is Magellan Asset Management Limited with 9.5% of shares outstanding. Scali Consolidated Pty Ltd is the second largest shareholder owning 7.9% of common stock, and Perpetual Limited holds about 6.3% of the company stock.
Looking at the shareholder registry, we can see that 51% of the ownership is controlled by the top 12 shareholders, meaning that no single shareholder has a majority interest in the ownership.
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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of Nick Scali
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
Insider ownership is positive when it signals leadership 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 in some circumstances.
Our most recent data indicates that insiders own less than 1% of Nick Scali Limited. However, it's possible that insiders might have an indirect interest through a more complex structure. It seems the board members have no more than AU$4.0m worth of shares in the AU$1.3b company. We generally like to see a board more invested. However it might be worth checking if those insiders have been buying.
General Public Ownership
The general public-- including retail investors -- own 42% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Private Company Ownership
We can see that Private Companies own 13%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Nick Scali better, we need to consider many other factors. Be aware that Nick Scali is showing 1 warning sign in our investment analysis, you should know about...
If you would prefer discover what analysts are predicting in terms of future growth, do not miss this freereport on analyst forecasts.
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.
