Michael Hill International's significant private companies ownership suggests that the key decisions are influenced by shareholders from the larger public
50% of the business is held by the top 2 shareholders
If you want to know who really controls Michael Hill International Limited (ASX:MHJ), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are private companies with 39% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
And individual investors on the other hand have a 36% ownership in the company.
In the chart below, we zoom in on the different ownership groups of Michael Hill International.
What Does The Institutional Ownership Tell Us About Michael Hill International?
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.
As you can see, institutional investors have a fair amount of stake in Michael Hill International. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Michael Hill International's historic earnings and revenue below, but keep in mind there's always more to the story.
ASX:MHJ Earnings and Revenue Growth November 24th 2023
We note that hedge funds don't have a meaningful investment in Michael Hill International. Hoglett Hamlet Limited is currently the company's largest shareholder with 39% of shares outstanding. For context, the second largest shareholder holds about 11% of the shares outstanding, followed by an ownership of 5.0% by the third-largest shareholder. Emma Hill, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors. Furthermore, CEO Daniel Bracken is the owner of 0.7% of the company's shares.
After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.
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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
Insider Ownership Of Michael Hill International
The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.
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 information suggests that insiders maintain a significant holding in Michael Hill International Limited. Insiders have a AU$32m stake in this AU$310m business. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.
General Public Ownership
The general public, who are usually individual investors, hold a 36% stake in Michael Hill International. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.
Private Company Ownership
We can see that Private Companies own 39%, of the shares on issue. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Michael Hill International you should know about.
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.
