Given the large stake in the stock by institutions, City of London Investment Group's stock price might be vulnerable to their trading decisions
A total of 3 investors have a majority stake in the company with 52% ownership
37% of City of London Investment Group is held by insiders
To get a sense of who is truly in control of City of London Investment Group Plc (LON:CLIG), 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 46% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
Because institutional owners have a huge pool of resources and liquidity, their investing decisions tend to carry a great deal of weight, especially with individual investors. Therefore, a good portion of institutional money invested in the company is usually a huge vote of confidence on its future.
In the chart below, we zoom in on the different ownership groups of City of London Investment Group.
See our latest analysis for City of London Investment Group
LSE:CLIG Ownership Breakdown January 4th 2024
What Does The Institutional Ownership Tell Us About City of London Investment Group?
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 City of London Investment Group does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see City of London Investment Group's historic earnings and revenue below, but keep in mind there's always more to the story.
LSE:CLIG Earnings and Revenue Growth January 4th 2024
Hedge funds don't have many shares in City of London Investment Group. George Karpus is currently the largest shareholder, with 33% of shares outstanding. U.S. Bancorp Asset Management, Inc. is the second largest shareholder owning 12% of common stock, and Aberforth Partners LLP holds about 7.4% of the company stock. Additionally, the company's CEO Thomas Griffith directly holds 1.1% of the total shares outstanding.
To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.
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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.
Insider Ownership Of City of London Investment Group
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.
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.
It seems insiders own a significant proportion of City of London Investment Group Plc. Insiders own UK£58m worth of shares in the UK£158m company. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public, who are usually individual investors, hold a 13% stake in City of London Investment Group. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand City of London Investment Group better, we need to consider many other factors. For example, we've discovered 2 warning signs for City of London Investment Group (1 shouldn't be ignored!) that you should be aware of before investing here.
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.
