With 50% ownership of the shares, Fletcher Building Limited (NZSE:FBU) is heavily dominated by institutional owners

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editorial-team@simplywallst.com (Simply Wall St)

Thu, Mar 14, 2024, 12:13 PM 4 min read

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.

Let's delve deeper into each type of owner of Fletcher Building, beginning with the chart below.

View our latest analysis for Fletcher Building

ownership-breakdown — NZSE:FBU Ownership Breakdown March 14th 2024

What Does The Institutional Ownership Tell Us About Fletcher Building?

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.

We can see that Fletcher Building 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. 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 Fletcher Building's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth — NZSE:FBU Earnings and Revenue Growth March 14th 2024

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Hedge funds don't have many shares in Fletcher Building. Looking at our data, we can see that the largest shareholder is Orbis Investment Management Limited with 13% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 5.0% and 4.7%, of the shares outstanding, respectively.

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.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Fletcher Building

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.

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.

Our most recent data indicates that insiders own less than 1% of Fletcher Building Limited. Keep in mind that it's a big company, and the insiders own NZ$15m worth of shares. The absolute value might be more important than the proportional share. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

With a 50% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Fletcher Building. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Fletcher Building better, we need to consider many other factors. Case in point: We've spotted 4 warning signs for Fletcher Building you should be aware of.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.