Constellation Software Inc.'s (TSE:CSU) top owners are retail investors with 53% stake, while 40% is held by institutions
Key Insights
Constellation Software's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
The top 25 shareholders own 35% of the company
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. The group holding the most number of shares in the company, around 53% to be precise, is retail investors. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
Meanwhile, institutions make up 40% of the company’s shareholders. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies.
In the chart below, we zoom in on the different ownership groups of Constellation Software.
View our latest analysis for Constellation Software
What Does The Institutional Ownership Tell Us About Constellation Software?
Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.
Constellation Software already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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.
Hedge funds don't have many shares in Constellation Software. FMR LLC is currently the company's largest shareholder with 4.2% of shares outstanding. In comparison, the second and third largest shareholders hold about 3.1% and 3.0% of the stock. Additionally, the company's CEO Mark Leonard directly holds 2.0% of the total shares outstanding.
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.
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 Constellation Software
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.
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 some shares in Constellation Software Inc.. The insiders have a meaningful stake worth CA$3.4b. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.
General Public Ownership
The general public -- including retail investors -- own 53% of Constellation Software. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Constellation Software better, we need to consider many other factors. Be aware that Constellation Software is showing 2 warning signs in our investment analysis , you should know about...
If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.
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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.
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