U.S. Markets open in 4 hrs 25 mins
  • S&P Futures

    4,078.50
    -3.25 (-0.08%)
     
  • Dow Futures

    34,394.00
    -35.00 (-0.10%)
     
  • Nasdaq Futures

    12,046.25
    -16.50 (-0.14%)
     
  • Russell 2000 Futures

    1,880.60
    -3.10 (-0.16%)
     
  • Crude Oil

    81.17
    -0.05 (-0.06%)
     
  • Gold

    1,814.20
    -1.00 (-0.06%)
     
  • Silver

    22.96
    +0.12 (+0.52%)
     
  • EUR/USD

    1.0527
    -0.0001 (-0.0105%)
     
  • 10-Yr Bond

    3.5290
    0.0000 (0.00%)
     
  • Vix

    20.20
    -0.38 (-1.85%)
     
  • GBP/USD

    1.2257
    +0.0000 (+0.0024%)
     
  • USD/JPY

    134.2470
    -1.0590 (-0.7827%)
     
  • BTC-USD

    16,970.35
    -142.35 (-0.83%)
     
  • CMC Crypto 200

    402.35
    -3.80 (-0.94%)
     
  • FTSE 100

    7,534.58
    -23.91 (-0.32%)
     
  • Nikkei 225

    27,777.90
    -448.18 (-1.59%)
     

Constellation Software Inc.'s (TSE:CSU) market cap dropped CA$1.9b last week; individual investors who hold 56% were hit as were institutions

To get a sense of who is truly in control of Constellation Software Inc. (TSE:CSU), it is important to understand the ownership structure of the business. With 56% stake, individual investors possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While institutions who own 37% came under pressure after market cap dropped to CA$40b last week,individual investors took the most losses.

In the chart below, we zoom in on the different ownership groups of Constellation Software.

Check out our latest analysis for Constellation Software

ownership-breakdown
ownership-breakdown

What Does The Institutional Ownership Tell Us About Constellation Software?

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 Constellation Software. 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. 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 Constellation Software, (below). Of course, keep in mind that there are other factors to consider, too.

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

Constellation Software is not owned by hedge funds. FMR LLC is currently the largest shareholder, with 4.5% of shares outstanding. The Vanguard Group, Inc. is the second largest shareholder owning 3.2% of common stock, and Akre Capital Management, LLC holds about 3.0% of the company stock. In addition, we found that Mark Leonard, the CEO has 2.0% of the shares allocated to their name.

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 Constellation Software

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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 Constellation Software Inc.. Insiders own CA$2.8b worth of shares (at current prices). Most would say this shows a good alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

The general public -- including retail investors -- own 56% of Constellation Software. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should be aware of the 1 warning sign we've spotted with Constellation Software .

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

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