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If you want to know who really controls Rainbow Papers Limited (NSE:RAINBOWPAP), then you'll have to look at the makeup of its share registry. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. Warren Buffett said that he likes 'a business with enduring competitive advantages that is run by able and owner-oriented people'. So it's nice to see some insider ownership, because it may suggest that management is owner-oriented.
Rainbow Papers is a smaller company with a market capitalization of ₹64m, so it may still be flying under the radar of many institutional investors. Taking a look at our data on the ownership groups (below), it's seems that institutional investors have bought into the company. Let's delve deeper into each type of owner, to discover more about RAINBOWPAP.
See our latest analysis for Rainbow Papers
What Does The Institutional Ownership Tell Us About Rainbow Papers?
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.
As you can see, institutional investors own 37% of Rainbow Papers. 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 Rainbow Papers, (below). Of course, keep in mind that there are other factors to consider, too.
Rainbow Papers 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 Rainbow Papers
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.
I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.
Our most recent data indicates that insiders own some shares in Rainbow Papers Limited. In their own names, insiders own ₹4.0m worth of stock in the ₹64m company. Some would say this shows alignment of interests between shareholders and the board, though I generally prefer to see bigger insider holdings. But it might be worth checking if those insiders have been selling.