Insurance Australia Group Limited (ASX:IAG) surges 5.8%; individual investors who own 60% shares profited along with institutions

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

Sun, Jun 9, 2024, 5:21 PM 4 min read

If you want to know who really controls Insurance Australia Group Limited (ASX:IAG), then you'll have to look at the makeup of its share registry. With 60% stake, individual investors possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While individual investors were the group that reaped the most benefits after last week’s 5.8% price gain, institutions also received a 36% cut.

In the chart below, we zoom in on the different ownership groups of Insurance Australia Group.

See our latest analysis for Insurance Australia Group

ownership-breakdown — ASX:IAG Ownership Breakdown June 9th 2024

What Does The Institutional Ownership Tell Us About Insurance Australia Group?

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 Insurance Australia Group 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Insurance Australia Group's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth — ASX:IAG Earnings and Revenue Growth June 9th 2024

We note that hedge funds don't have a meaningful investment in Insurance Australia Group. State Street Global Advisors, Inc. is currently the largest shareholder, with 7.1% of shares outstanding. BlackRock, Inc. is the second largest shareholder owning 6.0% of common stock, and The Vanguard Group, Inc. holds about 5.2% of the company stock.

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.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. 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 Insurance Australia Group

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our data suggests that insiders own under 1% of Insurance Australia Group Limited in their own names. It is a very large company, so it would be surprising to see insiders own a large proportion of the company. Though their holding amounts to less than 1%, we can see that board members collectively own AU$14m worth of shares (at current prices). 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, mostly comprising of individual investors, collectively holds 60% of Insurance Australia Group shares. 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.

Public Company Ownership

It appears to us that public companies own 4.1% of Insurance Australia Group. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Insurance Australia Group better, we need to consider many other factors. For example, we've discovered 1 warning sign for Insurance Australia Group that you should be aware of before investing here.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.