This is what the shareholding structure of Metcash Limited (ASX:MTS) looks like

Every investor in Metcash Limited (ASX:MTS) should know the most powerful shareholder groups. Institutions often own shares in larger companies, and we expect to see insiders owning a noticeable percentage of smaller ones. Companies that were previously publicly owned tend to have less insider ownership.

Metcash isn’t huge, but it’s not particularly small either. It has a market capitalization of A$3.7 billion, which means it generally expects to see certain institutions listed on the share register. In the graph below, we can see that the institutions are visible on the share register. We can zoom in on the different ownership groups, to learn more about Metcash.

See our latest analysis for Metcash

ASX: MTS Ownership Breakdown June 15, 2022

What does institutional ownership tell us about Metcash?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it is included in a major index. We would expect most companies to have some institutions listed, especially if they are growing.

We can see that Metcash has institutional investors; and they own a good part of the shares of the company. This may indicate that the company has some degree of credibility in the investment community. However, it is best to be wary of relying on the so-called validation that accompanies institutional investors. They are also sometimes wrong. When multiple institutions hold a stock, there is always a risk that they are in a “crowded trade”. When such a transaction goes wrong, multiple parties may compete to quickly sell shares. This risk is higher in a company with no history of growth. You can see Metcash’s revenue and historical earnings below, but keep in mind there’s always more to tell.

earnings-and-revenue-growth
ASX: MTS Earnings and Revenue Growth June 15, 2022

Metcash does not belong to hedge funds. The company’s largest shareholder is Pendal Group Limited with a 9.9% stake. Meanwhile, the second and third largest shareholders hold 6.3% and 5.0% of the outstanding shares, respectively.

Looking at our ownership data, we found that 25 of the major shareholders collectively own less than 50% of the share register, implying that no single individual holds a majority stake.

Institutional ownership research is a good way to assess and filter the expected performance of a stock. The same can be obtained by studying the feelings of the analyst. There are a reasonable number of analysts covering the stock, so it might be useful to know their overall view on the future.

Insider ownership of Metcash

The definition of company insiders can be subjective and varies from jurisdiction to jurisdiction. Our data reflects individual insiders, capturing at least board members. Management is ultimately responsible to the board of directors. However, it is not uncommon for managers to be members of the management board, especially if they are founders or CEOs.

Most view insider ownership as a positive because it can indicate that the board is well aligned with other shareholders. However, there are times when too much power is concentrated within this group.

Our most recent data indicates that insiders own less than 1% of Metcash Limited. It’s a big company, so even a small proportionate interest can create alignment between the board and shareholders. In this case, insiders hold A$7.8 million worth of shares. It’s always good to see at least some insider ownership, but it might be worth checking to see if those insiders have sold.

General public property

The general public, including retail investors, owns 55% of Metcash. This size of ownership gives mainstream investors a certain collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed corporate acquisitions.

Next steps:

While it is worth considering the different groups that own a business, there are other, even more important factors. To this end, you should be aware of the 1 warning sign we spotted with Metcash.

If you’re like me, you might want to ask yourself if this business will grow or shrink. Luckily, you can check out this free report showing analyst predictions for its future.

NB: The figures in this article are calculated using trailing twelve month data, which refers to the 12 month period ending on the last day of the month in which the financial statements are dated. This may not be consistent with the annual report figures for the full year.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.