The big shareholder groups in The Tata Power Company Limited (NSE:TATAPOWER) have power over the company. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. Companies that used to be publicly owned tend to have lower insider ownership.

With a market capitalization of ₹214b, Tata Power is a decent size, so it is probably on the radar of institutional investors. In the chart below below, we can see that institutions own shares in the company. We can zoom in on the different ownership groups, to learn more about TATAPOWER.

See our latest analysis for Tata Power

What Does The Institutional Ownership Tell Us About Tata Power?

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 Tata Power does have institutional investors; and they hold 43% of the 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. 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 Tata Power’s historic earnings and revenue, below, but keep in mind there’s always more to the story.

Hedge funds don’t have many shares in Tata Power. 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 Tata Power

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 The Tata Power Company Limited. But they may have an indirect interest through a corporate structure that we haven’t picked up on. It’s a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own ₹10m 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.