Given the large stake in the stock by institutions, Burford Capital's stock price might be vulnerable to their trading decisions
A total of 25 investors have a majority stake in the company with 41% ownership
Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock
If you want to know who really controls Burford Capital Limited (LON:BUR), then you'll have to look at the makeup of its share registry. We can see that institutions own the lion's share in the company with 46% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
Because institutional owners have a huge pool of resources and liquidity, their investing decisions tend to carry a great deal of weight, especially with individual investors. As a result, a sizeable amount of institutional money invested in a firm is generally viewed as a positive attribute.
In the chart below, we zoom in on the different ownership groups of Burford Capital.
What Does The Institutional Ownership Tell Us About Burford Capital?
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.
We can see that Burford Capital does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Burford Capital, (below). Of course, keep in mind that there are other factors to consider, too.
AIM:BUR Earnings and Revenue Growth September 29th 2023
We note that hedge funds don't have a meaningful investment in Burford Capital. The company's largest shareholder is Columbia Management Investment Advisers, LLC, with ownership of 4.7%. With 4.5% and 3.9% of the shares outstanding respectively, Jonathan Molot and Invesco Ltd. are the second and third largest shareholders. Jonathan Molot, who is the second-largest shareholder, also happens to hold the title of Chief Investment Officer. In addition, we found that Christopher Bogart, the CEO has 3.5% of the shares allocated to their name.
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 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 Burford Capital
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.
We can see that insiders own shares in Burford Capital Limited. This is a big company, so it is good to see this level of alignment. Insiders own UK£213m worth of shares (at current prices). Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.
General Public Ownership
With a 45% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Burford Capital. 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.
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 example, we've discovered 4 warning signs for Burford Capital (2 shouldn't be ignored!) that you should be aware of before investing here.
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.
