In This Article:
Key Insights
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Given the large stake in the stock by institutions, Megaport's stock price might be vulnerable to their trading decisions
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A total of 10 investors have a majority stake in the company with 52% ownership
To get a sense of who is truly in control of Megaport Limited (ASX:MP1), it is important to understand the ownership structure of the business. We can see that institutions own the lion's share in the company with 63% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
Given the vast amount of money and research capacities at their disposal, institutional ownership tends to carry a lot of weight, especially with individual investors. As a result, a sizeable amount of institutional money invested in a firm is generally viewed as a positive attribute.
In the chart below, we zoom in on the different ownership groups of Megaport.
Check out our latest analysis for Megaport
What Does The Institutional Ownership Tell Us About Megaport?
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.
Megaport already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Megaport's earnings history below. Of course, the future is what really matters.
Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. We note that hedge funds don't have a meaningful investment in Megaport. The company's largest shareholder is Australian Super Pty Ltd, with ownership of 10%. For context, the second largest shareholder holds about 7.9% of the shares outstanding, followed by an ownership of 6.4% by the third-largest shareholder.
We also observed that the top 10 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.
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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.