Could The Australian Pharmaceutical Industries Limited (ASX:API) Ownership Structure Tell Us Something Useful?
Simply Wall St
4 min read
If you want to know who really controls Australian Pharmaceutical Industries Limited (ASX:API), then you'll have to look at the makeup of its share registry. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. Companies that have been privatized tend to have low insider ownership.
Australian Pharmaceutical Industries is a smaller company with a market capitalization of AU$554m, so it may still be flying under the radar of many institutional investors. In the chart below, we can see that institutions own shares in the company. We can zoom in on the different ownership groups, to learn more about Australian Pharmaceutical Industries.
What Does The Institutional Ownership Tell Us About Australian Pharmaceutical Industries?
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.
As you can see, institutional investors have a fair amount of stake in Australian Pharmaceutical Industries. 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 Australian Pharmaceutical Industries' historic earnings and revenue below, but keep in mind there's always more to the story.
ASX:API Earnings and Revenue Growth March 6th 2021
We note that hedge funds don't have a meaningful investment in Australian Pharmaceutical Industries. Our data shows that Washington H. Soul Pattinson and Company Limited is the largest shareholder with 19% of shares outstanding. In comparison, the second and third largest shareholders hold about 6.2% and 3.6% of the stock.
A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.
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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of Australian Pharmaceutical Industries
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.
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.
I can report that insiders do own shares in Australian Pharmaceutical Industries Limited. As individuals, the insiders collectively own AU$7.1m worth of the AU$554m company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public, mostly retail investors, hold a substantial 59% stake in Australian Pharmaceutical Industries, suggesting it is a fairly popular stock. This level of ownership gives retail investors the power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.
Public Company Ownership
Public companies currently own 19% of Australian Pharmaceutical Industries stock. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Australian Pharmaceutical Industries better, we need to consider many other factors.
If you would prefer discover what analysts are predicting in terms of future growth, do not miss this freereport on analyst forecasts.
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.
This article by Simply Wall St is general in nature. 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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