Incitec Pivot Limited’s (ASX:IPL) largest shareholders are retail investors with 49% ownership, institutions own 42%

Key Insights

• The considerable ownership by retail investors in Incitec Pivot indicates that they collectively have a greater say in management and business strategy
• 48% of the business is held by the top 25 shareholders
• Institutional ownership in Incitec Pivot is 42%

A look at the shareholders of Incitec Pivot Limited (ASX:IPL) can tell us which group is most powerful. The group holding the most number of shares in the company, around 49% to be precise, is retail investors. Put another way, the group faces the maximum upside potential (or downside risk).

And institutions on the other hand have a 42% ownership in the company. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies.

In the chart below, we zoom in on the different ownership groups of Incitec Pivot.

See our latest analysis for Incitec Pivot

What Does The Institutional Ownership Tell Us About Incitec Pivot?

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 Incitec Pivot. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Incitec Pivot, (below). Of course, keep in mind that there are other factors to consider, too.

It looks like hedge funds own 8.9% of Incitec Pivot shares. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Janchor Partners Ltd. is currently the company’s largest shareholder with 8.9% of shares outstanding. The Vanguard Group, Inc. is the second largest shareholder owning 5.1% of common stock, and Harris Associates L.P. holds about 5.0% of the company stock.

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.

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 Incitec Pivot

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.

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.

Our data suggests that insiders own under 1% of Incitec Pivot Limited in their own names. It is a pretty big company, so it would be possible for board members to own a meaningful interest in the company, without owning much of a proportional interest. In this case, they own around AU$7.2m worth of shares (at current prices). It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

With a 49% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Incitec Pivot. While this group can’t necessarily call the shots, it can certainly have a real influence on how the company is run.

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 Incitec Pivot (1 is a bit unpleasant!) that you should be aware of before investing here.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.