ClearView Wealth Limited (ASX:CVW) stock most popular amongst private equity firms who own 45%, while individual investors hold 29%
Key Insights
The considerable ownership by private equity firms in ClearView Wealth indicates that they collectively have a greater say in management and business strategy
A total of 2 investors have a majority stake in the company with 60% ownership
A look at the shareholders of ClearView Wealth Limited (ASX:CVW) can tell us which group is most powerful. We can see that private equity firms own the lion's share in the company with 45% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
And individual investors on the other hand have a 29% ownership in the company.
In the chart below, we zoom in on the different ownership groups of ClearView Wealth.
View our latest analysis for ClearView Wealth
What Does The Institutional Ownership Tell Us About ClearView Wealth?
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.
We can see that ClearView Wealth does have institutional investors; and they hold a good portion of the company's stock. 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. 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 ClearView Wealth's historic earnings and revenue below, but keep in mind there's always more to the story.
Hedge funds don't have many shares in ClearView Wealth. Our data shows that Crescent Capital Partners Management Pty Ltd. is the largest shareholder with 45% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 15% and 3.7%, of the shares outstanding, respectively.
A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 60% stake.
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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.
Insider Ownership Of ClearView Wealth
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
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 ClearView Wealth Limited. It has a market capitalization of just AU$350m, and insiders have AU$16m worth of shares, in their own names. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.
General Public Ownership
With a 29% ownership, the general public, mostly comprising of individual investors, have some degree of sway over ClearView Wealth. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.
Private Equity Ownership
Private equity firms hold a 45% stake in ClearView Wealth. This suggests they can be influential in key policy decisions. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.
Public Company Ownership
It appears to us that public companies own 3.7% of ClearView Wealth. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 2 warning signs for ClearView Wealth (1 doesn't sit too well with us!) that you should be aware of before investing here.
Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.
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.
