Every investor in Ecofibre Limited (ASX: EOF) needs to know the most powerful shareholder groups. Insiders often own a large number of younger and smaller companies, while large companies tend to have institutions as shareholders. Warren Buffett said he enjoys “a business with sustainable competitive advantages that is run by skilled, owner-oriented people.” So it’s nice to see some insider ownership as it can suggest that the management is owner focused.
Ecofibre is not a large company by global standards. It has a market cap of A $ 169 million, which means it wouldn’t get the attention of many institutional investors. Our analysis of company ownership, below, shows that institutional investors bought the company. We can zoom in on the different property groups, to find out more about Ecofibre.
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What does institutional ownership tell us about Ecofibre?
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. You would expect most businesses to have institutions listed, especially if they are growing.
We see that Ecofibre has institutional investors; and they own a good portion of the shares of the company. This implies that the analysts working for these institutions have looked at the stock and they like it. But like anyone else, they could be wrong. When several institutions have a stock, there is always a risk that they are in a “crowded trade”. When such a trade goes awry, several parties may compete with each other to sell stocks quickly. This risk is higher in a company without a history of growth. You can see Ecofibre’s historical revenue and revenue below, but keep in mind that there is always more to tell.
We note that hedge funds do not have a significant investment in Ecofibre. Our data shows Barry Lambert is the largest shareholder with 22% of the shares outstanding. With respectively 16% and 9.5% of the shares outstanding, Philip Warner and James Vicars are the second and third largest shareholders. In addition, we found that Eric Wang, the CEO, owns 4.1% of the shares attributed to their name.
Our research also highlighted the fact that around 52% of the company is controlled by the 4 major shareholders, which suggests that these owners exercise significant influence over the company.
Institutional ownership research is a good way to assess and filter the expected performance of a stock. The same can be achieved by studying the feelings of analysts. While there is some analyst coverage, the company is probably not widely covered. So that might get more attention, on the track.
Insider property of Ecofibre
The definition of company insiders can be subjective and vary by jurisdiction. Our data reflects individual insiders, at the very least capturing board members. The management of the company responds to the board and the board must represent the interests of the shareholders. Notably, sometimes the senior executives are themselves part of the board of directors.
Most consider insider ownership to be positive because it can indicate that the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.
It appears that insiders own more than half of the shares of Ecofibre Limited. It gives them a lot of power. So they have an A $ 96 million stake in this A $ 169 million company. It’s good to see this level of investment. You can check here if these insiders have bought recently.
General public property
With a 32% stake, the general public has some influence on Ecofibre. This size of ownership, while considerable, may not be sufficient to change company policy if the decision is not synchronized with other large shareholders.
Private company ownership
It can be seen that private companies hold 5.4% of the shares issued. Private companies can be related parties. Sometimes, insiders have an interest in a public company through a stake in a private company, rather than in their own capacity as an individual. Although it is difficult to draw general conclusions, it should be noted as an additional area of research.
It’s always worth thinking about the different groups that own shares in a company. But to understand Ecofibre better, there are many other factors that we need to consider. Know that Ecofibre shows 4 warning signs in our investment analysis , and 1 of these concerns …
But finally this is the future, not the past, which will determine the performance of the owners of this business. Therefore, we believe it is advisable to take a look at this free report showing whether analysts are predicting a better future.
NB: The figures in this article are calculated from data for the last twelve months, which refer to the 12-month period ending on the last date of the month in which the balance sheet is dated. This may not be consistent with figures in annual reports.
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