Civmec Limited's (ASX:CVL) last week's 18% decline must have disappointed retail investors who have a significant stake

Key Insights

• The considerable ownership by retail investors in Civmec indicates that they collectively have a greater say in management and business strategy
• A total of 18 investors have a majority stake in the company with 49% ownership
• 47% of Civmec is held by insiders

To get a sense of who is truly in control of Civmec Limited (ASX:CVL), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 51% to be precise, is retail investors. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Following a 18% decrease in the stock price last week, retail investors suffered the most losses, but insiders who own 47% stock also took a hit.

Let's delve deeper into each type of owner of Civmec, beginning with the chart below.

See our latest analysis for Civmec

What Does The Lack Of Institutional Ownership Tell Us About Civmec?

Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.

There are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of Civmec, for yourself, below.

Civmec is not owned by hedge funds. Our data suggests that James Fitzgerald, who is also the company's Top Key Executive, holds the most number of shares at 19%. When an insider holds a sizeable amount of a company's stock, investors consider it as a positive sign because it suggests that insiders are willing to have their wealth tied up in the future of the company. In comparison, the second and third largest shareholders hold about 19% and 7.1% of the stock. Interestingly, the second-largest shareholder, Patrick Tallon is also Chief Executive Officer, again, pointing towards strong insider ownership amongst the company's top shareholders.

A deeper look at our ownership data shows that the top 18 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Civmec

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

It seems insiders own a significant proportion of Civmec Limited. Insiders own AU$250m worth of shares in the AU$538m company. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public -- including retail investors -- own 51% of Civmec. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Take risks for example - Civmec has 2 warning signs (and 1 which can't be ignored) we think 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.