To get a sense of who is truly in control of EQT Holdings Limited (ASX:EQT), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 59% to be precise, is retail investors. Put another way, the group faces the maximum upside potential (or downside risk).
Meanwhile, institutions make up 34% of the company’s shareholders. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies.
Let's delve deeper into each type of owner of EQT Holdings, beginning with the chart below.
What Does The Institutional Ownership Tell Us About EQT Holdings?
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.
EQT Holdings already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see EQT Holdings' historic earnings and revenue below, but keep in mind there's always more to the story.
ASX:EQT Earnings and Revenue Growth February 9th 2024
Hedge funds don't have many shares in EQT Holdings. Australian Foundation Investment Company Limited is currently the company's largest shareholder with 6.2% of shares outstanding. For context, the second largest shareholder holds about 4.8% of the shares outstanding, followed by an ownership of 4.7% by the third-largest shareholder. Additionally, the company's CEO Michael O’Brien directly holds 0.5% of the total shares outstanding.
On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.
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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of EQT Holdings
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.
Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.
Our most recent data indicates that insiders own some shares in EQT Holdings Limited. It has a market capitalization of just AU$765m, and insiders have AU$17m worth of shares, in their own names. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public, who are usually individual investors, hold a substantial 59% stake in EQT Holdings, suggesting it is a fairly popular stock. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.
Public Company Ownership
Public companies currently own 4.7% of EQT Holdings stock. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.
Next Steps:
I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. For example, we've discovered 2 warning signs for EQT Holdings (1 makes us a bit uncomfortable!) that you should be aware of before investing here.
If you would prefer discover what analysts are predicting in terms of future growth, do not miss this freereport on analyst forecasts.
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.
