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Are Institutions Heavily Invested In Canadian Utilities Limited's (TSE:CU) Shares?

Simply Wall St

The big shareholder groups in Canadian Utilities Limited (TSE:CU) have power over the company. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. We also tend to see lower insider ownership in companies that were previously publicly owned.

Canadian Utilities is a pretty big company. It has a market capitalization of CA$9.3b. Normally institutions would own a significant portion of a company this size. In the chart below, we can see that institutional investors have bought into the company. Let's delve deeper into each type of owner, to discover more about Canadian Utilities.

Check out our latest analysis for Canadian Utilities

TSX:CU Ownership Breakdown July 9th 2020

What Does The Institutional Ownership Tell Us About Canadian Utilities?

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 Canadian Utilities 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Canadian Utilities's earnings history, below. Of course, the future is what really matters.

TSX:CU Earnings and Revenue Growth July 9th 2020

We note that hedge funds don't have a meaningful investment in Canadian Utilities. ATCO Ltd. is currently the largest shareholder, with 52% of shares outstanding. This implies that they have majority interest control of the future of the company. RBC Global Asset Management Inc. is the second largest shareholder owning 1.6% of common stock, and BMO Global Asset Management holds about 1.4% of the company stock.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. 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 Canadian Utilities

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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

We can see that insiders own shares in Canadian Utilities Limited. This is a big company, so it is good to see this level of alignment. Insiders own CA$119m worth of shares (at current prices). If you would like to explore the question of insider alignment, you can click here to see if insiders have been buying or selling.

General Public Ownership

The general public, with a 32% 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.

Public Company Ownership

We can see that public companies hold 52%, of the CU shares on issue. We can't be certain, but this is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Canadian Utilities is showing 3 warning signs in our investment analysis , and 2 of those can't be ignored...

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.

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. 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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