Australian Finance Group Limited's (ASX:AFG) market cap up AU$45m last week, benefiting both retail investors who own 51% as well as insiders

Key Insights

• Significant control over Australian Finance Group by retail investors implies that the general public has more power to influence management and governance-related decisions
• The top 25 shareholders own 49% of the company
• Recent purchases by insiders

A look at the shareholders of Australian Finance Group Limited (ASX:AFG) can tell us which group is most powerful. We can see that retail investors own the lion's share in the company with 51% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While retail investors were the group that reaped the most benefits after last week’s 13% price gain, insiders also received a 23% cut.

In the chart below, we zoom in on the different ownership groups of Australian Finance Group.

View our latest analysis for Australian Finance Group

What Does The Institutional Ownership Tell Us About Australian Finance Group?

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.

Australian Finance Group already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Australian Finance Group, (below). Of course, keep in mind that there are other factors to consider, too.

Australian Finance Group is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Brett McKeon with 6.0% of shares outstanding. The second and third largest shareholders are Lisa Bevan and Malcolm Watkins, with an equal amount of shares to their name at 6.0%. Interestingly, the bottom two of the top three shareholders also hold the title of Chief Operating Officer and Member of the Board of Directors, respectively, suggesting that these insiders have a personal stake in the company. In addition, we found that David Bailey, the CEO has 0.8% of the shares allocated to their name.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Australian Finance Group

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

It seems insiders own a significant proportion of Australian Finance Group Limited. It has a market capitalization of just AU$391m, and insiders have AU$90m worth of shares in their own names. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 51% of Australian Finance Group shares. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Private Company Ownership

Our data indicates that Private Companies hold 5.1%, of the company's shares. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Australian Finance Group better, we need to consider many other factors. Be aware that Australian Finance Group is showing 2 warning signs in our investment analysis , and 1 of those is potentially serious...

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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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.