Who Are The Major Shareholders Of Seshasayee Paper and Boards Limited (NSE:SESHAPAPER)?

Asher Wright

Updated Sun, Sep 9, 2018, 7:10 PM

In this article, I will take a quick look at Seshasayee Paper and Boards Limited’s (NSE:SESHAPAPER) recent ownership structure – an unconventional investing subject, but an important one. Ownership structure has been found to have an impact on shareholder returns in both short- and long-term. If an activist institution invests the same amount of capital in a stock as a passive long-term pension fund, the implications are potentially different for key corporate financing decisions such as the use of excess cash or the source of financing. While these are more of a long-term investor’s concern, short-term investors may find the impact of institutional trading overwhelming enough to lose out on what could be a potential opportunity. Therefore, I will take a look at SESHAPAPER’s shareholders in more detail.

Check out our latest analysis for Seshasayee Paper and Boards

NSEI:SESHAPAPER Ownership Summary September 10th 18

Institutional Ownership

Institutions account for 34.9% of SESHAPAPER’s outstanding shares, a significant enough holding to move stock prices if they start buying and selling in large quantities, especially when there are relatively small amounts of shares available on the market to trade. However, as not all institutions are alike, such high volatility events, especially in the short-term, have been more frequently linked to active market participants like hedge funds. Hedge funds, considered active investors, hold a 5.4% stake in the company, which may be the cause of high short-term volatility in the stock price. I am going to further examine SESHAPAPER’s ownership structure to check how other major shareholders can affect its investment case.

Insider Ownership

I find insiders are an important group of stakeholders, who are directly involved in making key decisions related to the use of capital. In essence, insider ownership is more about the alignment of shareholders’ interests with the management. With 6.0% ownership, SESHAPAPER insiders is an important ownership type. This level of stake with insiders indicate highly aligned interests of shareholders and company executives. However, it would be interesting to take a look at their buying and selling activities lately. Buying may be sign of upbeat future expectations, but selling doesn’t necessarily mean the opposite as the insiders may be motivated by financial needs or they are simply diversifying their risk.

General Public Ownership

The general public holds a substantial 17.4% stake in SESHAPAPER, making it a highly popular stock among retail investors. With this size of ownership, retail investors can collectively play a role in major company policies that affect shareholders returns, including executive remuneration and the appointment of directors. They can also exercise the power to decline an acquisition or merger that may not improve profitability.

Private Company Ownership

Another important group of owners for potential investors in SESHAPAPER are private companies that hold a stake of 21.0% in SESHAPAPER. These are companies that are mainly invested due to their strategic interests or are incentivized by reaping capital gains on investments their shareholdings. An ownership of this size indicates a strong financial backing and has the potential to influence SESHAPAPER’s business strategy. Thus, investors should dig deeper into SESHAPAPER’s business relations with these companies and how it can affect shareholder returns in the long-term.

Next Steps:

I suggest investors seek some degree of margin of safety due to high institutional ownership in SESHAPAPER, in particular due to the strong presence of active hedge fund investors. This may enable shareholders to comfortably invest in the company and avoid getting trapped in a sustained sell-off that is often observed in stocks with this level of institutional participation. However, if you are building an investment case for SESHAPAPER, ownership structure alone should not dictate your decision to buy or sell the stock. Rather, you should be examining fundamental factors such as Seshasayee Paper and Boards’s past track record and financial health. I highly recommend you to complete your research by taking a look at the following:

Future Outlook: What are well-informed industry analysts predicting for SESHAPAPER’s future growth? Take a look at our free research report of analyst consensus for SESHAPAPER’s outlook.
Past Track Record: Has SESHAPAPER been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look at the free visual representations of SESHAPAPER’s historicals for more clarity.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.

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