U.S. markets open in 2 hours 27 minutes
  • S&P Futures

    3,777.25
    -26.00 (-0.68%)
     
  • Dow Futures

    30,156.00
    -209.00 (-0.69%)
     
  • Nasdaq Futures

    11,564.00
    -76.75 (-0.66%)
     
  • Russell 2000 Futures

    1,763.60
    -17.90 (-1.00%)
     
  • Crude Oil

    87.20
    +0.68 (+0.79%)
     
  • Gold

    1,719.90
    -10.60 (-0.61%)
     
  • Silver

    20.51
    -0.59 (-2.79%)
     
  • EUR/USD

    0.9929
    -0.0058 (-0.58%)
     
  • 10-Yr Bond

    3.6170
    0.0000 (0.00%)
     
  • Vix

    29.40
    -0.70 (-2.33%)
     
  • GBP/USD

    1.1370
    -0.0105 (-0.92%)
     
  • USD/JPY

    144.3610
    +0.1620 (+0.11%)
     
  • BTC-USD

    20,124.21
    +160.74 (+0.81%)
     
  • CMC Crypto 200

    455.95
    +10.52 (+2.36%)
     
  • FTSE 100

    7,010.31
    -76.15 (-1.07%)
     
  • Nikkei 225

    27,120.53
    +128.32 (+0.48%)
     

With 58% ownership of the shares, G8 Education Limited (ASX:GEM) is heavily dominated by institutional owners

·4 min read

Every investor in G8 Education Limited (ASX:GEM) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 58% to be precise, is institutions. Put another way, the group faces the maximum upside potential (or downside risk).

Since institutional have access to huge amounts of capital, their market moves tend to receive a lot of scrutiny by retail or individual investors. Therefore, a good portion of institutional money invested in the company is usually a huge vote of confidence on its future.

Let's take a closer look to see what the different types of shareholders can tell us about G8 Education.

Check out our latest analysis for G8 Education

ownership-breakdown
ownership-breakdown

What Does The Institutional Ownership Tell Us About G8 Education?

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.

As you can see, institutional investors have a fair amount of stake in G8 Education. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at G8 Education's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
earnings-and-revenue-growth

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. G8 Education is not owned by hedge funds. Orbis Investment Management Limited is currently the largest shareholder, with 14% of shares outstanding. For context, the second largest shareholder holds about 7.3% of the shares outstanding, followed by an ownership of 6.8% by the third-largest shareholder.

We also observed that the top 7 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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. 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 G8 Education

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.

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.

Our most recent data indicates that insiders own less than 1% of G8 Education Limited. But they may have an indirect interest through a corporate structure that we haven't picked up on. It appears that the board holds about AU$2.3m worth of stock. This compares to a market capitalization of AU$822m. We generally like to see a board more invested. However it might be worth checking if those insiders have been buying.

General Public Ownership

With a 40% ownership, the general public, mostly comprising of individual investors, have some degree of sway over G8 Education. 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.

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 for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with G8 Education , and understanding them should be part of your investment process.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here