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Is Bell Financial Group Limited's (ASX:BFG) Shareholder Ownership Skewed Towards Insiders?

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·4 min read
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A look at the shareholders of Bell Financial Group Limited (ASX:BFG) can tell us which group is most powerful. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. 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.

With a market capitalization of AU$516m, Bell Financial Group is a small cap stock, so it might not be well known by many institutional investors. In the chart below, we can see that institutions are not really that prevalent on the share registry. Let's take a closer look to see what the different types of shareholders can tell us about Bell Financial Group.

Check out our latest analysis for Bell Financial Group

ownership-breakdown
ownership-breakdown

What Does The Lack Of Institutional Ownership Tell Us About Bell Financial Group?

We don't tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it's not particularly common.

There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. Alternatively, there might be something about the company that has kept institutional investors away. Bell Financial Group's earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.

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

Bell Financial Group is not owned by hedge funds. Bell Group Holdings Pty Limited is currently the largest shareholder, with 46% of shares outstanding. In comparison, the second and third largest shareholders hold about 1.7% and 1.6% of the stock. Alastair Provan, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board.

On looking further, we found that 50% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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. As far I can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Bell Financial Group

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

Shareholders would probably be interested to learn that insiders own shares in Bell Financial Group Limited. It has a market capitalization of just AU$516m, and insiders have AU$50m worth of shares, in their own names. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 42% ownership, the general public have some degree of sway over Bell Financial Group. 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 48%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

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

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.

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.

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