Significant control over Magic Software Enterprises by public companies implies that the general public has more power to influence management and governance-related decisions
A total of 2 investors have a majority stake in the company with 54% ownership
If you want to know who really controls Magic Software Enterprises Ltd. (NASDAQ:MGIC), then you'll have to look at the makeup of its share registry. We can see that public companies own the lion's share in the company with 47% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
Meanwhile, individual investors make up 35% of the company’s shareholders.
Let's delve deeper into each type of owner of Magic Software Enterprises, beginning with the chart below.
NasdaqGS:MGIC Ownership Breakdown September 30th 2024
What Does The Institutional Ownership Tell Us About Magic Software Enterprises?
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.
As you can see, institutional investors have a fair amount of stake in Magic Software Enterprises. 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 Magic Software Enterprises' historic earnings and revenue below, but keep in mind there's always more to the story.
NasdaqGS:MGIC Earnings and Revenue Growth September 30th 2024
Magic Software Enterprises is not owned by hedge funds. Our data shows that Formula Systems (1985) Ltd. is the largest shareholder with 47% of shares outstanding. Clal Financial Management Ltd is the second largest shareholder owning 7.0% of common stock, and Migdal Mutual Funds Ltd. holds about 1.5% of the company stock.
To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.
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 is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.
Insider Ownership Of Magic Software Enterprises
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.
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.
Our information suggests that Magic Software Enterprises Ltd. insiders own under 1% of the company. It seems the board members have no more than US$2.3m worth of shares in the US$583m company. Many tend to prefer to see a board with bigger shareholdings. A good next step might be to take a look at this free summary of insider buying and selling.
General Public Ownership
With a 35% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Magic Software Enterprises. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.
Public Company Ownership
Public companies currently own 47% of Magic Software Enterprises stock. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we've identified 1 warning sign for Magic Software Enterprises that 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.
