While individual investors own 20% of Melcor Developments Ltd. (TSE:MRD), private companies are its largest shareholders with 51% ownership
Key Insights
The considerable ownership by private companies in Melcor Developments indicates that they collectively have a greater say in management and business strategy
The largest shareholder of the company is Melton Holdings Ltd with a 50% stake
If you want to know who really controls Melcor Developments Ltd. (TSE:MRD), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 51% to be precise, is private companies. Put another way, the group faces the maximum upside potential (or downside risk).
Meanwhile, individual investors make up 20% of the company’s shareholders.
Let's take a closer look to see what the different types of shareholders can tell us about Melcor Developments.
See our latest analysis for Melcor Developments
What Does The Institutional Ownership Tell Us About Melcor Developments?
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.
Melcor Developments already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Melcor Developments' historic earnings and revenue below, but keep in mind there's always more to the story.
Hedge funds don't have many shares in Melcor Developments. The company's largest shareholder is Melton Holdings Ltd, with ownership of 50%. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. In comparison, the second and third largest shareholders hold about 9.9% and 7.4% of the stock. Timothy Melton, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board.
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 is some analyst coverage of the stock, but it could still become more well known, with time.
Insider Ownership Of Melcor Developments
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 Melcor Developments Ltd.. Insiders have a CA$46m stake in this CA$358m business. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.
General Public Ownership
The general public-- including retail investors -- own 20% stake in the company, and hence can't easily be ignored. 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.
Private Company Ownership
Our data indicates that Private Companies hold 51%, 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:
It's always worth thinking about the different groups who own shares in a company. But to understand Melcor Developments better, we need to consider many other factors. To that end, you should learn about the 3 warning signs we've spotted with Melcor Developments (including 1 which can't be ignored) .
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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