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Every investor in Allied Digital Services Limited (NSE:ADSL) should be aware of the most powerful shareholder groups. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. 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.
With a market capitalization of ₹678m, Allied Digital Services is a small cap stock, so it might not be well known by many institutional investors. Taking a look at our data on the ownership groups (below), it's 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 ADSL.
Check out our latest analysis for Allied Digital Services
What Does The Lack Of Institutional Ownership Tell Us About Allied Digital Services?
Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.
There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. Alternatively, there might be something about the company that has kept institutional investors away. Allied Digital Services's earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.
We note that hedge funds don't have a meaningful investment in Allied Digital Services. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.
Insider Ownership Of Allied Digital Services
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.
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.
It seems that insiders own more than half the Allied Digital Services Limited stock. This gives them a lot of power. So they have a ₹379m stake in this ₹678m business. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.