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Key Insights

• Contact Energy's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public

• 41% of the business is held by the top 25 shareholders

• Insiders have been selling lately

If you want to know who really controls Contact Energy Limited (NZSE:CEN), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 57% to be precise, is retail investors. Put another way, the group faces the maximum upside potential (or downside risk).

While institutions, who own 42% shares weren’t spared from last week’s NZ$263m market cap drop, retail investors as a group suffered the maximum losses

Let's take a closer look to see what the different types of shareholders can tell us about Contact Energy.

See our latest analysis for Contact Energy

What Does The Institutional Ownership Tell Us About Contact Energy?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

We can see that Contact Energy does have institutional investors; and they hold a good portion of the company's stock. 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 Contact Energy's historic earnings and revenue below, but keep in mind there's always more to the story.

Contact Energy is not owned by hedge funds. The company's largest shareholder is BlackRock, Inc., with ownership of 6.4%. With 6.0% and 4.8% of the shares outstanding respectively, Milford Asset Management, LTD and JPMorgan Chase & Co, Private Banking and Investment Banking Investments are the second and third largest shareholders.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.