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Do Insiders Own Lots Of Shares In Aro Granite Industries Limited (NSE:AROGRANITE)?

Simply Wall St

The big shareholder groups in Aro Granite Industries Limited (NSE:AROGRANITE) have power over the company. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. Warren Buffett said that he likes 'a business with enduring competitive advantages that is run by able and owner-oriented people'. So it's nice to see some insider ownership, because it may suggest that management is owner-oriented.

Aro Granite Industries is not a large company by global standards. It has a market capitalization of ₹581m, which means it wouldn't have the attention of many institutional investors. In the chart below below, we can see that institutions don't own shares in the company. We can zoom in on the different ownership groups, to learn more about AROGRANITE.

See our latest analysis for Aro Granite Industries

NSEI:AROGRANITE Ownership Summary, October 12th 2019

What Does The Lack Of Institutional Ownership Tell Us About Aro Granite Industries?

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. On the other hand, it's always possible that professional investors are avoiding a company because they don't think it's the best place for their money. Aro Granite Industries might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

NSEI:AROGRANITE Income Statement, October 12th 2019

We note that hedge funds don't have a meaningful investment in Aro Granite Industries. As far I can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Aro Granite Industries

The definition of company insiders can be subjective, and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.

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.

Our most recent data indicates that insiders own the majority of Aro Granite Industries Limited. This means they can collectively make decisions for the company. That means they own ₹337m worth of shares in the ₹581m company. That's quite meaningful. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they have been buying or selling.

General Public Ownership

The general public, with a 37% stake in the company, will not easily be ignored. 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

Our data indicates that Private Companies hold 3.8%, of the company's shares. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too.

I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow for free.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this 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.