Key Insights

• a2 Milk's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public

• 43% of the business is held by the top 25 shareholders

• Insiders have been selling lately

Every investor in The a2 Milk Company Limited (NZSE:ATM) should be aware of the most powerful shareholder groups. We can see that retail investors own the lion's share in the company with 56% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And institutions on the other hand have a 44% ownership in the company. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders.

Let's delve deeper into each type of owner of a2 Milk, beginning with the chart below.

See our latest analysis for a2 Milk

What Does The Institutional Ownership Tell Us About a2 Milk?

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 a2 Milk. 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 a2 Milk, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in a2 Milk. Perpetual Limited is currently the largest shareholder, with 7.6% of shares outstanding. With 5.7% and 5.5% of the shares outstanding respectively, Bangarra Group and Goldman Sachs Group, Investment Banking and Securities Investments are the second and third largest shareholders.

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 a2 Milk

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. 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.