Stock Analysis

Is GWA Group Limited (ASX:GWA) Popular Amongst Insiders?

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ASX:GWA
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If you want to know who really controls GWA Group Limited (ASX:GWA), then you'll have to look at the makeup of its share registry. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. Warren Buffett said that he likes "a business with enduring competitive advantages that is run by able and owner-oriented people." So it's nice to see some insider ownership, because it may suggest that management is owner-oriented.

With a market capitalization of AU$911m, GWA Group is a small cap stock, so it might not be well known by many institutional investors. Our analysis of the ownership of the company, below, shows that institutions own shares in the company. Let's delve deeper into each type of owner, to discover more about GWA Group.

See our latest analysis for GWA Group

ownership-breakdown
ASX:GWA Ownership Breakdown February 3rd 2021

What Does The Institutional Ownership Tell Us About GWA Group?

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.

As you can see, institutional investors have a fair amount of stake in GWA Group. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at GWA Group's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
ASX:GWA Earnings and Revenue Growth February 3rd 2021

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. GWA Group is not owned by hedge funds. The company's largest shareholder is The Vanguard Group, Inc., with ownership of 6.0%. The second and third largest shareholders are Franklin Resources, Inc. and Legg Mason, Inc., with an equal amount of shares to their name at 6.0%.

A closer look at our ownership figures suggests that the top 12 shareholders have a combined ownership of 52% implying that 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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of GWA Group

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. 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.

Shareholders would probably be interested to learn that insiders own shares in GWA Group Limited. As individuals, the insiders collectively own AU$64m worth of the AU$911m company. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.

General Public Ownership

With a 22% ownership, the general public have some degree of sway over GWA Group. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Company Ownership

We can see that Private Companies own 16%, of the shares on issue. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand GWA Group better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with GWA Group .

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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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