Institutions profited after MedAdvisor Limited's (ASX:MDR) market cap rose AU$41m last week but private companies profited the most
Key Insights
The considerable ownership by private companies in MedAdvisor indicates that they collectively have a greater say in management and business strategy
A total of 5 investors have a majority stake in the company with 50% ownership
Insiders have bought recently
A look at the shareholders of MedAdvisor Limited (ASX:MDR) can tell us which group is most powerful. The group holding the most number of shares in the company, around 34% to be precise, is private companies. Put another way, the group faces the maximum upside potential (or downside risk).
While private companies were the group that benefitted the most from last week’s AU$41m market cap gain, institutions too had a 30% share in those profits.
Let's take a closer look to see what the different types of shareholders can tell us about MedAdvisor.
View our latest analysis for MedAdvisor
What Does The Institutional Ownership Tell Us About MedAdvisor?
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 MedAdvisor does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see MedAdvisor's historic earnings and revenue below, but keep in mind there's always more to the story.
Hedge funds don't have many shares in MedAdvisor. The company's largest shareholder is The Pharmacy Guild of Australia, with ownership of 17%. For context, the second largest shareholder holds about 15% of the shares outstanding, followed by an ownership of 8.0% by the third-largest shareholder.
To make our study more interesting, we found that the top 5 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.
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 MedAdvisor
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.
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.
We can see that insiders own shares in MedAdvisor Limited. It has a market capitalization of just AU$159m, and insiders have AU$11m worth of shares, in their own names. Some would say this shows alignment of interests between shareholders and the board, though we generally prefer to see bigger insider holdings. But it might be worth checking if those insiders have been selling.
General Public Ownership
With a 29% ownership, the general public, mostly comprising of individual investors, have some degree of sway over MedAdvisor. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Private Company Ownership
Our data indicates that Private Companies hold 34%, of the company's shares. 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:
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 example, we've discovered 1 warning sign for MedAdvisor that you should be aware of before investing here.
But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.
