How Much Of Domino's Pizza Enterprises Limited (ASX:DMP) Do Insiders Own?

By
Simply Wall St
Published
December 31, 2021
ASX:DMP
Source: Shutterstock

Every investor in Domino's Pizza Enterprises Limited (ASX:DMP) should be aware of the most powerful shareholder groups. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, 'Don’t tell me what you think, tell me what you have in your portfolio.

Domino's Pizza Enterprises is a pretty big company. It has a market capitalization of AU$10b. Normally institutions would own a significant portion of a company this size. In the chart below, we can see that institutional investors have bought into the company. Let's take a closer look to see what the different types of shareholders can tell us about Domino's Pizza Enterprises.

Check out our latest analysis for Domino's Pizza Enterprises

ownership-breakdown
ASX:DMP Ownership Breakdown December 31st 2021

What Does The Institutional Ownership Tell Us About Domino's Pizza Enterprises?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

We can see that Domino's Pizza Enterprises does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Domino's Pizza Enterprises' earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
ASX:DMP Earnings and Revenue Growth December 31st 2021

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Domino's Pizza Enterprises is not owned by hedge funds. The company's largest shareholder is Somad Holdings Pty. Ltd., with ownership of 27%. Meanwhile, the second and third largest shareholders, hold 7.8% and 5.7%, of the shares outstanding, respectively. Additionally, the company's CEO Donald Meij directly holds 2.1% of the total shares outstanding.

Our research also brought to light the fact that roughly 50% of the company is controlled by the top 5 shareholders suggesting that these owners wield significant influence on the business.

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

Insider Ownership Of Domino's Pizza Enterprises

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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.

We can see that insiders own shares in Domino's Pizza Enterprises Limited. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around AU$517m worth of shares (at current prices). Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

The general public-- including retail investors -- own 16% 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.

Private Company Ownership

It seems that Private Companies own 27%, of the Domino's Pizza Enterprises stock. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

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 2 warning signs we've spotted with Domino's Pizza Enterprises .

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.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.