Who Really Owns Delta Technology Holdings Limited (NASDAQ:DELT)?

Joseph Holm

Updated Thu, Mar 29, 2018, 7:03 PM

In this article, I’m going to take a look at Delta Technology Holdings Limited’s (NASDAQ:DELT) latest ownership structure, a non-fundamental factor which is important, but remains a less discussed subject among investors. Ownership structure of a company has been found to affect share performance over time. Differences in ownership structure of companies can have a profound effect on how management’s incentives are aligned with shareholder returns, which is why we’ll take a moment to analyse DELT’s shareholder registry.

See our latest analysis for Delta Technology Holdings

NasdaqCM:DELT Ownership_summary Mar 30th 18

Institutional Ownership

Institutional investors transact in large blocks which can influence the momentum of stock prices, at least in the short-term, especially when there is a low level of public shares available on the market to trade. DELT hardly has any institutional ownership, leaving investors little to think about sharp price volatility in the stock that could take place due to institutional trading.

Insider Ownership

Another important group of shareholders are company insiders. Insider ownership has to do more with how the company is managed and less to do with the direct impact of the magnitude of shares trading on the market. A major group of owners of DELT is individual insiders, sitting with a hefty 22.55% stake in the company. Broadly, insider ownership of this level has been found to negatively affect companies with consistently low PE ratio (underperforming). And a positive impact has been seen on companies with a high PE ratio (outperforming). It’s also interesting to learn what DELT insiders have been doing with their shareholdings lately. While insider buying is possibly a sign of a positive outlook for the company, selling doesn’t necessarily indicate a negative outlook as they may be selling to meet personal financial needs.

General Public Ownership

The general public holds a substantial 49.88% stake in DELT, 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 Equity Ownership

With an ownership of 19.04%, private equity firms are a major stakeholder in DELT and are in a position to play an important role in shaping up corporate strategy with a focus on value creation. This is a positive sign for potential investors as these firms play an important role in aligning company policy with shareholder returns.

Private Company Ownership

Potential investors in DELT should also look at another important group of investors: private companies, with a stake of 7.80%, who are primarily invested because of strategic and capital gain interests. An ownership of this size indicates a strong financial backing and has the potential to influence DELT’s business strategy. Thus, investors should dig deeper into DELT’s business relations with these companies and how it can affect shareholder returns in the long-term.

Next Steps:

Institutional ownership level and composition in DELT is not high nor active enough to significantly impact its investment thesis. However, if you are building an investment case for DELT, ownership structure alone should not dictate your decision to buy or sell the stock. Instead, you should be evaluating company-specific factors such as Delta Technology Holdings’s past track record and financial health. I highly recommend you to complete your research by taking a look at the following:

1. Financial Health: Is DELT’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
2. Past Track Record: Has DELT 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 DELT’s historicals for more clarity.
3. 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 pass 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.