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Could The Iris Clothings Limited (NSE:IRISDOREME) Ownership Structure Tell Us Something Useful?

Simply Wall St

If you want to know who really controls Iris Clothings Limited (NSE:IRISDOREME), then you'll have to look at the makeup of its share registry. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. 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.'

Iris Clothings is a smaller company with a market capitalization of ₹569m, so it may still be flying under the radar of many institutional investors. Taking a look at our data on the ownership groups (below), it's seems that institutions are not on the share registry. Let's take a closer look to see what the different types of shareholder can tell us about IRISDOREME.

Check out our latest analysis for Iris Clothings

NSEI:IRISDOREME Ownership Summary, September 7th 2019

What Does The Lack Of Institutional Ownership Tell Us About Iris Clothings?

Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.

There are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to fund under management, so the institition does not bother to look closely at the company. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Iris Clothings might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

NSEI:IRISDOREME Income Statement, September 7th 2019

Hedge funds don't have many shares in Iris Clothings. As far I can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Iris Clothings

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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.

Our most recent data indicates that insiders own the majority of Iris Clothings Limited. This means they can collectively make decisions for the company. So they have a ₹460m stake in this ₹569m business. 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

With a 13% ownership, the general public have some degree of sway over IRISDOREME. 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 Company Ownership

It seems that Private Companies own 5.6%, of the IRISDOREME stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important.

I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.