Institutional investors in Flight Centre Travel Group Limited (ASX:FLT) see AU$173m decrease in market cap last week, although long-term gains have benefitted them.
Key Insights
Given the large stake in the stock by institutions, Flight Centre Travel Group's stock price might be vulnerable to their trading decisions
51% of the business is held by the top 9 shareholders
Every investor in Flight Centre Travel Group Limited (ASX:FLT) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are institutions with 54% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
Institutional investors was the group most impacted after the company's market cap fell to AU$4.0b last week. However, the 16% one-year return to shareholders may have helped lessen their pain. We would assume however, that they would be on the lookout for weakness in the future.
Let's delve deeper into each type of owner of Flight Centre Travel Group, beginning with the chart below.
View our latest analysis for Flight Centre Travel Group
What Does The Institutional Ownership Tell Us About Flight Centre Travel Group?
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 Flight Centre Travel Group does have institutional investors; and they hold a good portion of the company's stock. 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 Flight Centre Travel Group, (below). Of course, keep in mind that there are other factors to consider, too.
Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Hedge funds don't have many shares in Flight Centre Travel Group. Looking at our data, we can see that the largest shareholder is the CEO Graham Turner with 7.6% of shares outstanding. Bennelong Australian Equity Partners Pty Ltd is the second largest shareholder owning 7.5% of common stock, and Bangarra Group holds about 6.9% of the company stock.
On further inspection, we found that more than half the company's shares are owned by the top 9 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.
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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Flight Centre Travel Group
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.
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 information suggests that insiders maintain a significant holding in Flight Centre Travel Group Limited. It is very interesting to see that insiders have a meaningful AU$531m stake in this AU$4.0b 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 26% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Flight Centre Travel Group. 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 4.9%, 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. For instance, we've identified 2 warning signs for Flight Centre Travel Group that you should be aware of.
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.
