Stock Analysis

Do Insiders Own Lots Of Shares In Mader Group Limited (ASX:MAD)?

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ASX:MAD
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If you want to know who really controls Mader Group Limited (ASX:MAD), then you'll have to look at the makeup of its share registry. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. 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.

Mader Group is not a large company by global standards. It has a market capitalization of AU$179m, which means it wouldn't have the attention of many institutional investors. Taking a look at our data on the ownership groups (below), it seems that institutions are not on the share registry. Let's take a closer look to see what the different types of shareholders can tell us about Mader Group.

See our latest analysis for Mader Group

ownership-breakdown
ASX:MAD Ownership Breakdown February 16th 2021

What Does The Lack Of Institutional Ownership Tell Us About Mader Group?

We don't tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it's not particularly common.

There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. Alternatively, there might be something about the company that has kept institutional investors away. 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 Mader Group, for yourself, below.

earnings-and-revenue-growth
ASX:MAD Earnings and Revenue Growth February 16th 2021

Hedge funds don't have many shares in Mader Group. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Mader Group's case, its Senior Key Executive, Luke Mader, is the largest shareholder, holding 57% of shares outstanding. Craig Burton is the second largest shareholder owning 20% of common stock, and Carjay Investments Pty Ltd holds about 1.1% of the company stock.

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

Insider Ownership Of Mader Group

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 the majority of Mader Group Limited. This means they can collectively make decisions for the company. Given it has a market cap of AU$179m, that means they have AU$138m worth of shares. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, with a 21% stake in the company, will not easily be ignored. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Mader Group better, we need to consider many other factors. Take risks for example - Mader Group has 2 warning signs we think you should be aware of.

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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