Institutions own 49% of JB Hi-Fi Limited (ASX:JBH) shares but individual investors control 50% of the company

editorial-team@simplywallst.com (Simply Wall St)

Wed, Apr 10, 2024, 7:44 PM 4 min read

A look at the shareholders of JB Hi-Fi Limited (ASX:JBH) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are individual investors with 50% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And institutions on the other hand have a 49% ownership in the company. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders.

In the chart below, we zoom in on the different ownership groups of JB Hi-Fi.

Check out our latest analysis for JB Hi-Fi

ownership-breakdown — ASX:JBH Ownership Breakdown April 11th 2024

What Does The Institutional Ownership Tell Us About JB Hi-Fi?

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.

We can see that JB Hi-Fi does have institutional investors; and they hold a good portion of the company's stock. 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 JB Hi-Fi, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth — ASX:JBH Earnings and Revenue Growth April 11th 2024

JB Hi-Fi is not owned by hedge funds. Australian Super Pty Ltd is currently the largest shareholder, with 15% of shares outstanding. For context, the second largest shareholder holds about 5.8% of the shares outstanding, followed by an ownership of 5.3% by the third-largest shareholder.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of JB Hi-Fi

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.

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.

Our most recent data indicates that insiders own less than 1% of JB Hi-Fi Limited. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own AU$20m worth of shares. It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

The general public -- including retail investors -- own 50% of JB Hi-Fi. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. For example, we've discovered 2 warning signs for JB Hi-Fi (1 shouldn't be ignored!) that you should be aware of before investing here.

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.