Both retail investors who control a good portion of Fairfax Financial Holdings Limited (TSE:FFH) along with institutions must be dismayed after last week's 4.9% decrease
Significant control over Fairfax Financial Holdings by retail investors implies that the general public has more power to influence management and governance-related decisions
Every investor in Fairfax Financial Holdings Limited (TSE:FFH) should be aware of the most powerful shareholder groups. With 60% stake, retail investors possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
While institutions, who own 30% shares weren’t spared from last week’s CA$2.1b market cap drop, retail investors as a group suffered the maximum losses
Let's delve deeper into each type of owner of Fairfax Financial Holdings, beginning with the chart below.
What Does The Institutional Ownership Tell Us About Fairfax Financial Holdings?
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.
We can see that Fairfax Financial Holdings 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. 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 Fairfax Financial Holdings' historic earnings and revenue below, but keep in mind there's always more to the story.
TSX:FFH Earnings and Revenue Growth April 5th 2025
Fairfax Financial Holdings is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is the CEO V. Watsa with 9.6% of shares outstanding. The second and third largest shareholders are EdgePoint Investment Group Inc. and The Bank of Nova Scotia, Banking Investments, with an equal amount of shares to their name at 4.0%.
Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.
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 Fairfax Financial Holdings
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
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.
Our most recent data indicates that insiders own a reasonable proportion of Fairfax Financial Holdings Limited. It has a market capitalization of just CA$45b, and insiders have CA$4.8b worth of shares in their own names. That's quite significant. It is good to see this level of investment. 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 substantial 60% stake in Fairfax Financial Holdings, suggesting it is a fairly popular stock. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.
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.
