If you want to know who really controls VGI Partners Limited (ASX:VGI), then you'll have to look at the makeup of its share registry. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. I quite like to see at least a little bit of insider ownership. As Charlie Munger said 'Show me the incentive and I will show you the outcome.
VGI Partners is not a large company by global standards. It has a market capitalization of AU$481m, which means it wouldn't have the attention of many institutional investors. In the chart below, we can see that institutional investors have not yet purchased shares. We can zoom in on the different ownership groups, to learn more about VGI Partners.
Check out our latest analysis for VGI Partners
What Does The Lack Of Institutional Ownership Tell Us About VGI Partners?
Small companies that are not very actively traded often lack institutional investors, but it's less common to see large companies without them.
There are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of VGI Partners, for yourself, below.
Hedge funds don't have many shares in VGI Partners. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In VGI Partners' case, its Top Key Executive, Robert Luciano, is the largest shareholder, holding 59% of shares outstanding. For context, the second largest shareholder holds about 15% of the shares outstanding, followed by an ownership of 2.6% by the third-largest shareholder.
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. As far I can tell there isn't analyst coverage of the company, so it is probably flying under the radar.
Insider Ownership Of VGI Partners
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 VGI Partners Limited. This gives them effective control of the company. So they have a AU$374m stake in this AU$481m business. 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
With a 18% ownership, the general public have some degree of sway over VGI Partners. 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
We can see that Private Companies own 4.2%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.
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. Take risks for example - VGI Partners has 1 warning sign we think you should be aware of.
Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.
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. 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.
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