Institutions along with retail investors who hold considerable shares inMagellan Financial Group Limited (ASX:MFG) come under pressure; lose 5.9% of holdings value

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Simply Wall St

Thu, Aug 31, 2023, 7:31 PM 4 min read

Significant control over Magellan Financial Group by retail investors implies that the general public has more power to influence management and governance-related decisions
A total of 25 investors have a majority stake in the company with 47% ownership
43% of Magellan Financial Group is held by Institutions

A look at the shareholders of Magellan Financial Group Limited (ASX:MFG) can tell us which group is most powerful. The group holding the most number of shares in the company, around 51% to be precise, is retail investors. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Following a 5.9% decrease in the stock price last week, retail investors suffered the most losses, but institutions who own 43% stock also took a hit.

In the chart below, we zoom in on the different ownership groups of Magellan Financial Group.

See our latest analysis for Magellan Financial Group

ownership-breakdown — ASX:MFG Ownership Breakdown September 1st 2023

What Does The Institutional Ownership Tell Us About Magellan Financial Group?

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.

Magellan Financial Group already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Magellan Financial Group, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth — ASX:MFG Earnings and Revenue Growth September 1st 2023

Hedge funds don't have many shares in Magellan Financial Group. BlackRock, Inc. is currently the company's largest shareholder with 8.2% of shares outstanding. For context, the second largest shareholder holds about 4.9% of the shares outstanding, followed by an ownership of 4.7% by the third-largest shareholder.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Magellan Financial Group

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

We can see that insiders own shares in Magellan Financial Group Limited. The insiders have a meaningful stake worth AU$50m. Most would see this as a real positive. If you would like to explore the question of insider alignment, you can click here to see if insiders have been buying or selling.

General Public Ownership

The general public -- including retail investors -- own 51% of Magellan Financial Group. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Magellan Financial Group better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Magellan Financial Group you should be aware of, and 1 of them is significant.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.