Is Mercury NZ Limited (NZSE:MCY) Popular Amongst Institutions?

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Simply Wall St

Mon, May 9, 2022, 8:51 PM 4 min read

If you want to know who really controls Mercury NZ Limited (NZSE:MCY), then you'll have to look at the makeup of its share registry. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. Companies that used to be publicly owned tend to have lower insider ownership.

With a market capitalization of NZ$7.9b, Mercury NZ is rather large. We'd expect to see institutional investors on the register. Companies of this size are usually well known to retail investors, too. In the chart below, we can see that institutional investors have bought into the company. Let's take a closer look to see what the different types of shareholders can tell us about Mercury NZ.

Check out our latest analysis for Mercury NZ

ownership-breakdown — NZSE:MCY Ownership Breakdown May 10th 2022

What Does The Institutional Ownership Tell Us About Mercury NZ?

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.

As you can see, institutional investors have a fair amount of stake in Mercury NZ. 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 Mercury NZ, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth — NZSE:MCY Earnings and Revenue Growth May 10th 2022

Hedge funds don't have many shares in Mercury NZ. Looking at our data, we can see that the largest shareholder is New Zealand Superannuation Fund with 52% of shares outstanding. This implies that they have majority interest control of the future of the company. With 3.4% and 1.7% of the shares outstanding respectively, State Street Global Advisors, Inc. and The Vanguard Group, Inc. are the second and third largest shareholders.

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 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 Mercury NZ

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.

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 most recent data indicates that insiders own less than 1% of Mercury NZ 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 NZ$4.6m worth of shares. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public-- including retail investors -- own 36% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Mercury NZ better, we need to consider many other factors. Case in point: We've spotted 4 warning signs for Mercury NZ you should be aware of, and 1 of them is a bit unpleasant.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.