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The big shareholder groups in Fineotex Chemical Limited (NSE:FCL) have power over the company. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. I quite like to see at least a little bit of insider ownership. As Charlie Munger said 'Show me the incentive and I will show you the outcome.'
Fineotex Chemical is a smaller company with a market capitalization of ₹2.7b, so it may still be flying under the radar of many institutional investors. In the chart below below, we can see that institutions are not on the share registry. Let's take a closer look to see what the different types of shareholder can tell us about FCL.
See our latest analysis for Fineotex Chemical
What Does The Lack Of Institutional Ownership Tell Us About Fineotex Chemical?
We don't tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it's not particularly common.
There are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. On the other hand, it's always possible that professional investors are avoiding a company because they don't think it's the best place for their money. Fineotex Chemical might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.
Fineotex Chemical is not owned by hedge funds. As far I can tell there isn't analyst coverage of the company, so it is probably flying under the radar.
Insider Ownership Of Fineotex Chemical
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board; and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board, themselves.
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 information suggests that insiders own more than half of Fineotex Chemical Limited. This gives them effective control of the company. That means they own ₹1.8b worth of shares in the ₹2.7b company. That's quite meaningful. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.