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The big shareholder groups in TruScreen Limited (NZSE:TRU) have power over the company. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. 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.'
TruScreen is a smaller company with a market capitalization of NZ$26m, so it may still be flying under the radar of many institutional investors. In the chart below below, we can see that institutions don't own many shares in the company. Let's take a closer look to see what the different types of shareholder can tell us about TRU.
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What Does The Institutional Ownership Tell Us About TruScreen?
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.
Institutions own less than 5% of TruScreen. That indicates that the company is on the radar of some funds, but it isn't particularly popular with professional investors at the moment. If the company is growing earnings, that may indicate that it is just beginning to catch the attention of these deep-pocketed investors. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.
Hedge funds don't have many shares in TruScreen. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.
Insider Ownership Of TruScreen
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.
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.
It seems insiders own a significant proportion of TruScreen Limited. Insiders own NZ$12m worth of shares in the NZ$26m company. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.