While individual investors own 30% of Magic Software Enterprises Ltd. (NASDAQ:MGIC), public companies are its largest shareholders with 46% ownership
Key Insights
Magic Software Enterprises' significant public companies ownership suggests that the key decisions are influenced by shareholders from the larger public
53% of the business is held by the top 2 shareholders
If you want to know who really controls Magic Software Enterprises Ltd. (NASDAQ:MGIC), then you'll have to look at the makeup of its share registry. We can see that public companies own the lion's share in the company with 46% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
Meanwhile, individual investors make up 30% of the company’s shareholders.
Let's delve deeper into each type of owner of Magic Software Enterprises, beginning with the chart below.
See our latest analysis for Magic Software Enterprises
What Does The Institutional Ownership Tell Us About Magic Software Enterprises?
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.
We can see that Magic Software Enterprises does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Magic Software Enterprises' earnings history below. Of course, the future is what really matters.
Hedge funds don't have many shares in Magic Software Enterprises. Formula Systems (1985) Ltd. is currently the company's largest shareholder with 46% of shares outstanding. With 7.0% and 5.3% of the shares outstanding respectively, Clal Financial Management Ltd and Harel Insurance Investments and Finances Services Ltd, Asset Management Arm are the second and third largest 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 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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.
Insider Ownership Of Magic Software Enterprises
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.
Our most recent data indicates that insiders own less than 1% of Magic Software Enterprises Ltd.. It seems the board members have no more than US$1.9m worth of shares in the US$483m company. We generally like to see a board more invested. However it might be worth checking if those insiders have been buying.
General Public Ownership
With a 30% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Magic Software Enterprises. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Public Company Ownership
Public companies currently own 46% of Magic Software Enterprises stock. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Magic Software Enterprises better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Magic Software Enterprises (of which 1 doesn't sit too well with us!) you should know about.
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.
