Is Dicker Data Limited (ASX:DDR) Popular Amongst Insiders?

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Simply Wall St

Sun, Oct 25, 2020, 6:41 PM 4 min read

A look at the shareholders of Dicker Data Limited (ASX:DDR) can tell us which group is most powerful. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies. I quite like to see at least a little bit of insider ownership. As Charlie Munger said 'Show me the incentive and I will show you the outcome.

Dicker Data isn't enormous, but it's not particularly small either. It has a market capitalization of AU$1.7b, which means it would generally expect to see some institutions on the share registry. Taking a look at our data on the ownership groups (below), it seems that institutional investors have not yet purchased much of the company. We can zoom in on the different ownership groups, to learn more about Dicker Data.

See our latest analysis for Dicker Data

ownership-breakdown — ASX:DDR Ownership Breakdown October 26th 2020

What Does The Institutional Ownership Tell Us About Dicker Data?

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.

Less than 5% of Dicker Data is held by institutional investors. This suggests that some funds have the company in their sights, but many have not yet bought shares in it. If the business gets stronger from here, we could see a situation where more institutions are keen to buy. It is not uncommon to see a big share price rise if multiple institutional investors are trying to buy into a stock at the same time. So check out the historic earnings trajectory, below, but keep in mind it's the future that counts most.

earnings-and-revenue-growth — ASX:DDR Earnings and Revenue Growth October 26th 2020

Hedge funds don't have many shares in Dicker Data. With a 35% stake, CEO David Dicker is the largest shareholder. Fiona Brown is the second largest shareholder owning 32% of common stock, and Sargon Capital Pty Ltd, Asset Management Arm holds about 0.7% of the company stock.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 67% stake.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Dicker Data

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.

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 the majority of Dicker Data Limited. This means they can collectively make decisions for the company. That means insiders have a very meaningful AU$1.2b stake in this AU$1.7b business. Most would be pleased to see the board is investing alongside them. You may wish to discover if they have been buying or selling.

General Public Ownership

With a 30% ownership, the general public have some degree of sway over Dicker Data. 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 Dicker Data better, we need to consider many other factors. For instance, we've identified 5 warning signs for Dicker Data (1 is potentially serious) that you should be aware of.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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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