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The big shareholder groups in EML Payments Limited (ASX:EML) have power over the company. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. Companies that used to be publicly owned tend to have lower insider ownership.
With a market capitalization of AU$1.1b, EML Payments is a decent size, so it is probably on the radar of institutional investors. In the chart below, we can see that institutions are noticeable on the share registry. Let's take a closer look to see what the different types of shareholders can tell us about EML Payments.
Check out our latest analysis for EML Payments
What Does The Institutional Ownership Tell Us About EML Payments?
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.
EML Payments already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 EML Payments' historic earnings and revenue below, but keep in mind there's always more to the story.
EML Payments is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is First Sentier Investors (Australia) IM Ltd with 11% of shares outstanding. In comparison, the second and third largest shareholders hold about 4.7% and 4.3% of the stock. Additionally, the company's CEO Thomas Cregan directly holds 2.2% of the total shares outstanding.
On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.
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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of EML Payments
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.