Magnet Forensics Inc. (TSE:MAGT) insiders have significant skin in the game with 74% ownership
Key Insights
Insiders appear to have a vested interest in Magnet Forensics' growth, as seen by their sizeable ownership
The top 2 shareholders own 56% of the company
To get a sense of who is truly in control of Magnet Forensics Inc. (TSE:MAGT), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual insiders with 74% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
So it follows, every decision made by insiders of Magnet Forensics regarding the company's future would be crucial to them.
Let's take a closer look to see what the different types of shareholders can tell us about Magnet Forensics.
View our latest analysis for Magnet Forensics
What Does The Institutional Ownership Tell Us About Magnet Forensics?
Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.
Magnet Forensics already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Magnet Forensics' historic earnings and revenue below, but keep in mind there's always more to the story.
Hedge funds don't have many shares in Magnet Forensics. Our data suggests that Jad Saliba, who is also the company's President, holds the most number of shares at 29%. When an insider holds a sizeable amount of a company's stock, investors consider it as a positive sign because it suggests that insiders are willing to have their wealth tied up in the future of the company. Adam Belsher is the second largest shareholder owning 27% of common stock, and James Balsillie holds about 15% of the company stock. Interestingly, the second and third-largest shareholders also happen to be the Chief Executive Officer and Chairman of the Board, respectively. This once again signifies considerable insider ownership amongst the company's top shareholders.
To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.
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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of Magnet Forensics
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.
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 information suggests that insiders own more than half of Magnet Forensics Inc.. This gives them effective control of the company. Given it has a market cap of CA$1.8b, that means insiders have a whopping CA$1.4b worth of shares in their own names. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if they have been selling down their stake.
General Public Ownership
With a 13% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Magnet Forensics. 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.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should be aware of the 2 warning signs we've spotted with Magnet Forensics .
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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