Duratec Limited's (ASX:DUR) stock price dropped 11% last week; individual investors would not be happy

Key Insights

• Significant control over Duratec by individual investors implies that the general public has more power to influence management and governance-related decisions
• The top 5 shareholders own 52% of the company
• 32% of Duratec is held by insiders

To get a sense of who is truly in control of Duratec Limited (ASX:DUR), it is important to understand the ownership structure of the business. We can see that individual investors own the lion's share in the company with 40% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While insiders, who own 32% shares weren’t spared from last week’s AU$40m market cap drop, individual investors as a group suffered the maximum losses

In the chart below, we zoom in on the different ownership groups of Duratec.

See our latest analysis for Duratec

What Does The Institutional Ownership Tell Us About Duratec?

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.

Since institutions own only a small portion of Duratec, many may not have spent much time considering the stock. But it's clear that some have; and they liked it enough to buy in. If the company is growing earnings, that may indicate that it is just beginning to catch the attention of these deep-pocketed investors. We sometimes see a rising share price when a few big institutions want to buy a certain stock at the same time. The history of earnings and revenue, which you can see below, could be helpful in considering if more institutional investors will want the stock. Of course, there are plenty of other factors to consider, too.

We note that hedge funds don't have a meaningful investment in Duratec. Ertech Holdings Pty Ltd is currently the company's largest shareholder with 19% of shares outstanding. The second and third largest shareholders are Christopher Oates and Robert Harcourt, with an equal amount of shares to their name at 9.7%. Two of the top three shareholders happen to be Chief Executive Officer and Member of the Board of Directors, respectively. That is, insiders feature higher up in the heirarchy of the company's top shareholders.

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 is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Duratec

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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.

Our information suggests that insiders maintain a significant holding in Duratec Limited. Insiders own AU$105m worth of shares in the AU$330m 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, who are usually individual investors, hold a 40% stake in Duratec. 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 Company Ownership

We can see that Private Companies own 23%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

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. To that end, you should be aware of the 1 warning sign we've spotted with Duratec .

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.