In This Article:
Key Insights
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The considerable ownership by retail investors in Incitec Pivot indicates that they collectively have a greater say in management and business strategy
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The top 25 shareholders own 49% of the company
To get a sense of who is truly in control of Incitec Pivot Limited (ASX:IPL), it is important to understand the ownership structure of the business. With 50% stake, retail investors possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
Following a 3.9% decrease in the stock price last week, retail investors suffered the most losses, but institutions who own 40% stock also took a hit.
In the chart below, we zoom in on the different ownership groups of Incitec Pivot.
See our latest analysis for Incitec Pivot
What Does The Institutional Ownership Tell Us About Incitec Pivot?
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 Incitec Pivot. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Incitec Pivot, (below). Of course, keep in mind that there are other factors to consider, too.
It looks like hedge funds own 9.1% of Incitec Pivot shares. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. Looking at our data, we can see that the largest shareholder is Janchor Partners Limited with 9.1% of shares outstanding. The second and third largest shareholders are The Vanguard Group, Inc. and Orbis Investment Management Limited, with an equal amount of shares to their name at 6.3%.
Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.
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.