iCollege Limited's (ASX:ICT) market cap up AU$22m last week, benefiting both individual investors who own 60% as well as insiders

By
Simply Wall St
Published
February 09, 2022
ASX:ICT
Source: Shutterstock

If you want to know who really controls iCollege Limited (ASX:ICT), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 60% to be precise, is individual investors. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While individual investors were the group that benefitted the most from last week’s AU$22m market cap gain, insiders too had a 17% share in those profits.

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

Check out our latest analysis for iCollege

ownership-breakdown
ASX:ICT Ownership Breakdown February 9th 2022

What Does The Institutional Ownership Tell Us About iCollege?

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.

As you can see, institutional investors have a fair amount of stake in iCollege. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of iCollege, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
ASX:ICT Earnings and Revenue Growth February 9th 2022

We note that hedge funds don't have a meaningful investment in iCollege. Perpetual Limited is currently the largest shareholder, with 6.2% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 5.5% and 5.2%, of the shares outstanding, respectively. Ashish Katta, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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 iCollege

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 maintain a significant holding in iCollege Limited. Insiders have a AU$24m stake in this AU$141m business. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 60% of iCollege shares. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Private Company Ownership

We can see that Private Companies own 6.9%, of the shares on issue. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 1 warning sign for iCollege you should be aware of.

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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