If you want to know who really controls Capitec Bank Holdings Limited (JSE:CPI), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are institutions with 38% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
After a year of 1.8% losses, last week’s 4.4% gain would be welcomed by institutional investors as a likely sign that returns might start trending higher.
In the chart below, we zoom in on the different ownership groups of Capitec Bank Holdings.
What Does The Institutional Ownership Tell Us About Capitec Bank 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 Capitec Bank Holdings does have institutional investors; and they hold a good portion of the company's stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Capitec Bank Holdings' historic earnings and revenue below, but keep in mind there's always more to the story.
JSE:CPI Earnings and Revenue Growth December 26th 2022
We note that hedge funds don't have a meaningful investment in Capitec Bank Holdings. Public Investment Corporation Limited is currently the company's largest shareholder with 14% of shares outstanding. In comparison, the second and third largest shareholders hold about 11% and 7.3% of the stock. Additionally, the company's CEO Gerhardus Fourie directly holds 0.9% of the total shares outstanding.
On further inspection, we found that more than half the company's shares are owned by the top 9 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.
While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
Insider Ownership Of Capitec Bank Holdings
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.
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.
It seems insiders own a significant proportion of Capitec Bank Holdings Limited. Insiders own R44b worth of shares in the R220b company. That's quite meaningful. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.
General Public Ownership
The general public, who are usually individual investors, hold a 34% stake in Capitec Bank Holdings. 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.
Private Company Ownership
We can see that Private Companies own 7.3%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example - Capitec Bank Holdings has 1 warning sign we think you should be aware of.
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.
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