Abu Dhabi Islamic Bank PJSC's (ADX:ADIB) stock price dropped 3.7% last week; retail investors would not be happy

Key Insights

• The considerable ownership by retail investors in Abu Dhabi Islamic Bank PJSC indicates that they collectively have a greater say in management and business strategy
• 51% of the business is held by the top 5 shareholders
• Institutional ownership in Abu Dhabi Islamic Bank PJSC is 13%

Every investor in Abu Dhabi Islamic Bank PJSC (ADX:ADIB) should be aware of the most powerful shareholder groups. With 46% stake, retail investors possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And last week, retail investors endured the biggest losses as the stock fell by 3.7%.

Let's take a closer look to see what the different types of shareholders can tell us about Abu Dhabi Islamic Bank PJSC.

Check out our latest analysis for Abu Dhabi Islamic Bank PJSC

What Does The Institutional Ownership Tell Us About Abu Dhabi Islamic Bank PJSC?

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. We would expect most companies to have some institutions on the register, especially if they are growing.

Abu Dhabi Islamic Bank PJSC 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Abu Dhabi Islamic Bank PJSC, (below). Of course, keep in mind that there are other factors to consider, too.

Abu Dhabi Islamic Bank PJSC is not owned by hedge funds. Emirates International Investment Company LLC is currently the company's largest shareholder with 39% of shares outstanding. In comparison, the second and third largest shareholders hold about 6.8% and 1.8% of the stock. Jawaan Awaidha Suhail Al Khaili, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board.

To make our study more interesting, we found that the top 5 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Abu Dhabi Islamic Bank PJSC

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.

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 some shares in Abu Dhabi Islamic Bank PJSC. The insiders have a meaningful stake worth د.إ712m. Most would say this shows a good alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

With a 46% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Abu Dhabi Islamic Bank PJSC. 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 Equity Ownership

With a stake of 39%, private equity firms could influence the Abu Dhabi Islamic Bank PJSC board. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Abu Dhabi Islamic Bank PJSC better, we need to consider many other factors. For example, we've discovered 1 warning sign for Abu Dhabi Islamic Bank PJSC that you should be aware of before investing here.

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.

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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.