Stock Analysis

What You Need To Know About ASX Limited's (ASX:ASX) Investor Composition

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ASX:ASX
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The big shareholder groups in ASX Limited (ASX:ASX) have power over the company. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. Companies that have been privatized tend to have low insider ownership.

ASX is a pretty big company. It has a market capitalization of AU$14b. Normally institutions would own a significant portion of a company this size. In the chart below, we can see that institutions own shares in the company. We can zoom in on the different ownership groups, to learn more about ASX.

See our latest analysis for ASX

ownership-breakdown
ASX:ASX Ownership Breakdown January 16th 2021

What Does The Institutional Ownership Tell Us About ASX?

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.

ASX 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 ASX, (below). Of course, keep in mind that there are other factors to consider, too.

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

ASX is not owned by hedge funds. AustralianSuper Pty. Ltd. is currently the largest shareholder, with 6.0% of shares outstanding. The Vanguard Group, Inc. is the second largest shareholder owning 5.0% of common stock, and Legg Mason, Inc. holds about 0.8% of the company stock.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

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 ASX

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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.

Our most recent data indicates that insiders own less than 1% of ASX Limited. It is a very large company, so it would be surprising to see insiders own a large proportion of the company. Though their holding amounts to less than 1%, we can see that board members collectively own AU$66m worth of shares (at current prices). It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

The general public -- mostly retail investors -- own 58% of ASX. This size of ownership gives retail investors collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

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. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for ASX you should know about.

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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