Every investor in PPC Ltd (JSE: PPC) should know the most powerful groups of shareholders. Institutions often hold stocks in larger companies, and we expect insiders to own a significant percentage of the smaller companies. Companies that were previously publicly owned tend to have lower levels of insider ownership.
PPC is a smaller company with a market cap of R5.4 billion, so it may still fly under the radar of many institutional investors. Our analysis of ownership of the company below shows that institutions own shares in the company. Let’s take a closer look at what the different types of shareholders can say about PPC.
Check out our latest analysis for PPC
JSE: PPC Ownership Breakdown May 19, 2021
What does institutional ownership tell us about PPC?
Institutions usually measure themselves against a benchmark when reporting to their own investors. As a result, they often become more enthusiastic about a stock once it’s included in a major index. We would expect most companies to have some institutes on their register, especially as they grow.
PPC already has institutes in the share register. Indeed, they have a respectable stake in the company. This suggests some credibility with professional investors. But we cannot rely on this fact alone, as institutions sometimes make bad investments, as everyone does. If several institutions change their view of a share at the same time, the share price can fall quickly. It is therefore worth looking at PPC’s profit history below. Of course, the future is what really matters.
JSE: PPC Earnings and Revenue Growth May 19, 2021
With institutional investors owning more than half of the stocks in issue, the board of directors is likely to need to be mindful of their preferences. PPC is not part of hedge funds. The company’s largest shareholder is Value Capital Partners with a 12% stake. In comparison, the second and third largest shareholders hold around 10.0% and 7.0% of the shares.
We continued digging and found that 10 of the top shareholders make up roughly 50% of the register, which means that there are some smaller shareholders alongside larger shareholders, which somewhat balances the interests of the others.
Investigating institutional ownership is a great way to measure and filter the expected performance of a stock. The same can be achieved by examining the analysts’ feelings. We don’t currently include analyst coverage on the stock, so the company is unlikely to be widely used.
Inside ownership of PPC
The definition of an insider can vary slightly between different countries, but the members of the board of directors always count. The management’s response to the board of directors, which should represent the interests of the shareholders. In particular, top managers are sometimes on the board themselves.
Inside ownership is positive when it signals that leadership thinks like the real owners of the company. However, high inside ownership can also give immense power to a small group within the company. This can be negative under certain circumstances.
Our data suggests that insiders own less than 1% of PPC Ltd in their own name. However, we note that insiders may have an indirect interest through a private company or other corporate structure. It has a market capitalization of only R5.4b and the board only has shares worth R15m in its own name. I generally like it when a board is invested more. However, it might be worth checking to see if these insiders have bought.
General public property
The general public has a 19% stake in PPC. While this size of property is substantial, it may not be enough to change company policy if the decision does not coincide with other major shareholders.
Private equity owner
With a 12% stake, private equity firms are able to play a role in shaping corporate strategy with an emphasis on value creation. Sometimes private equity lasts for the long term, but generally they have a shorter investment horizon and, as the name suggests, don’t invest much in public companies. After a while, they may try to sell and reinstall capital elsewhere.
We can see that private companies own 8.5% of the shares in issue. It might be worth investigating further. If related parties such as insiders have an interest in one of these private companies, this should be stated in the annual report. Private companies can also have a strategic interest in the company.
I find it very interesting to see who exactly owns a company. But to really gain insight, we need to consider other information as well. Case in point: we have discovered 3 warning signs for PPC You should be aware of this, and 2 of them are somewhat worrying.
Naturally This may not be the best stock to buy. That’s why you might want to see ours free Collection of interesting perspectives with favorable financial data.
NB: The figures in this article are calculated using data from the last twelve months, which refers to the twelve month period ending on the last date of the month in which the financial statements are dated. This may not match the figures in the annual report for the full year.
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