While institutions own 40% of Diversified United Investment Limited (ASX:DUI), retail investors are its largest shareholders with 53% ownership

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editorial-team@simplywallst.com (Simply Wall St)

Mon, Nov 25, 2024, 1:00 PM 4 min read

If you want to know who really controls Diversified United Investment Limited (ASX:DUI), then you'll have to look at the makeup of its share registry. With 53% stake, retail investors possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Meanwhile, institutions make up 40% 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.

In the chart below, we zoom in on the different ownership groups of Diversified United Investment.

Check out our latest analysis for Diversified United Investment

ownership-breakdown — ASX:DUI Ownership Breakdown November 25th 2024

What Does The Institutional Ownership Tell Us About Diversified United Investment?

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 Diversified United Investment. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Diversified United Investment's historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth — ASX:DUI Earnings and Revenue Growth November 25th 2024

Diversified United Investment is not owned by hedge funds. Our data shows that Ian Potter Foundation, Endowment Arm is the largest shareholder with 23% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 7.6% and 6.2%, of the shares outstanding, respectively.

Our studies suggest that the top 19 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 it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Diversified United Investment

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

We can see that insiders own shares in Diversified United Investment Limited. In their own names, insiders own AU$56m worth of stock in the AU$1.1b company. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public -- including retail investors -- own 53% of Diversified United Investment. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Diversified United Investment better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Diversified United Investment you should be aware of.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.