With 92% institutional ownership, IG Group Holdings plc (LON:IGG) is a favorite amongst the big guns

Simply Wall St

Sat, Jul 15, 2023, 2:21 AM 4 min read

A look at the shareholders of IG Group Holdings plc (LON:IGG) can tell us which group is most powerful. The group holding the most number of shares in the company, around 92% to be precise, is institutions. 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. 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 IG Group Holdings.

See our latest analysis for IG Group Holdings

ownership-breakdown — LSE:IGG Ownership Breakdown July 15th 2023

What Does The Institutional Ownership Tell Us About IG Group Holdings?

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.

As you can see, institutional investors have a fair amount of stake in IG Group Holdings. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of IG Group Holdings, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth — LSE:IGG Earnings and Revenue Growth July 15th 2023

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 IG Group Holdings. BlackRock, Inc. is currently the largest shareholder, with 9.0% of shares outstanding. In comparison, the second and third largest shareholders hold about 6.6% and 6.5% of the stock.

After doing some more digging, we found that the top 15 have the combined ownership of 51% in the company, suggesting that no single shareholder has significant control over the company.

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 a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of IG Group Holdings

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. 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.

We can report that insiders do own shares in IG Group Holdings plc. As individuals, the insiders collectively own UK£6.5m worth of the UK£169m company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With 3.1% ownership, the general public, mostly comprising of individual investors, are a relatively smaller ownership class in IG Group Holdings. We'd generally expect to see a higher level of ownership by the general public, than this. It's not too concerning, but it is worth noting that retail investors might struggle to influence board decisions.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand IG Group Holdings better, we need to consider many other factors.

I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow, for free.

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.

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.

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