Both private companies who control a good portion of Premier Investments Limited (ASX:PMV) along with institutions must be dismayed after last week's 4.3% decrease
The considerable ownership by private companies in Premier Investments indicates that they collectively have a greater say in management and business strategy
A total of 3 investors have a majority stake in the company with 52% ownership
To get a sense of who is truly in control of Premier Investments Limited (ASX:PMV), it is important to understand the ownership structure of the business. With 37% stake, private companies possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
While institutions who own 28% came under pressure after market cap dropped to AU$3.7b last week,private companies took the most losses.
Let's take a closer look to see what the different types of shareholders can tell us about Premier Investments.
What Does The Institutional Ownership Tell Us About Premier Investments?
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.
Premier Investments 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 Premier Investments' earnings history below. Of course, the future is what really matters.
ASX:PMV Earnings and Revenue Growth May 30th 2023
We note that hedge funds don't have a meaningful investment in Premier Investments. Looking at our data, we can see that the largest shareholder is Century Plaza Investments Pty. Ltd. with 37% of shares outstanding. Solomon Lew is the second largest shareholder owning 8.0% of common stock, and Magellan Asset Management Limited holds about 7.7% of the company stock.
A more detailed study of the shareholder registry showed us that 3 of the top shareholders have a considerable amount of ownership in the company, via their 52% stake.
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 Premier Investments
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.
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.
We can see that insiders own shares in Premier Investments Limited. This is a big company, so it is good to see this level of alignment. Insiders own AU$332m worth of shares (at current prices). It is good to see this level of investment by insiders. You can check here to see if those insiders have been buying recently.
General Public Ownership
The general public, who are usually individual investors, hold a 26% stake in Premier Investments. 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.
Private Company Ownership
We can see that Private Companies own 37%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important.
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.
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