Insiders of Mader Group Limited (ASX:MAD) must be frustrated after market cap dropped AU$94m since recent purchases

Key Insights

• Significant insider control over Mader Group implies vested interests in company growth
• The largest shareholder of the company is Luke Mader with a 57% stake
• Recent purchases by insiders

To get a sense of who is truly in control of Mader Group Limited (ASX:MAD), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 77% to be precise, is individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).

A quick look at our data suggests that insiders have been buying shares in the company recently. However, with market cap down by AU$94m over the last week, their expectations were far from met.

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

Check out our latest analysis for Mader Group

What Does The Institutional Ownership Tell Us About Mader Group?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

Since institutions own only a small portion of Mader Group, 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. So if the company itself can improve over time, we may well see more institutional buyers in the future. It is not uncommon to see a big share price rise if multiple institutional investors are trying to buy into a stock at the same time. So check out the historic earnings trajectory, below, but keep in mind it's the future that counts most.

Mader Group is not owned by hedge funds. 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 Top Key Executive, Luke Mader, is the largest shareholder, holding 57% of shares outstanding. In comparison, the second and third largest shareholders hold about 20% and 1.1% of the 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 are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Mader 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.

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 own more than half of Mader Group Limited. This gives them effective control of the company. Given it has a market cap of AU$1.4b, that means they have AU$1.1b 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-- including retail investors -- own 20% stake in the company, and hence can't 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important.

I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow, for free.

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.