DGL Group Limited (ASX:DGL) insiders have had a fantastic week as stock increased 10%, and they haven't stopped buying

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

Every investor in DGL Group Limited (ASX:DGL) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 56% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Insiders who purchased recently should be particularly happy after the stock gained 10% in the past week.

Let's take a closer look to see what the different types of shareholders can tell us about DGL Group.

See our latest analysis for DGL Group

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

What Does The Institutional Ownership Tell Us About DGL Group?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

Institutions have a very small stake in DGL Group. That indicates that the company is on the radar of some funds, but it isn't particularly popular with professional investors at the moment. If the company is growing earnings, that may indicate that it is just beginning to catch the attention of these deep-pocketed investors. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.

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

Hedge funds don't have many shares in DGL Group. With a 54% stake, CEO Simon Henry is the largest shareholder. This implies that they possess majority interests and have significant control over the company. Investors usually consider it a good sign when the company leadership has such a significant stake, as this is widely perceived to increase the chance that the management will act in the best interests of the company. For context, the second largest shareholder holds about 4.5% of the shares outstanding, followed by an ownership of 3.1% 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. 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 DGL Group

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. 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.

It seems that insiders own more than half the DGL Group Limited stock. This gives them a lot of power. Given it has a market cap of AU$830m, that means they have AU$461m worth of shares. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 35% 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

Our data indicates that Private Companies hold 4.4%, of the company's shares. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand DGL Group better, we need to consider many other factors. Be aware that DGL Group is showing 2 warning signs in our investment analysis , you should know about...

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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