Stock Analysis

Private companies are Macmahon Holdings Limited's (ASX:MAH) biggest owners and were hit after market cap dropped AU$32m

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Key Insights

  • Significant control over Macmahon Holdings by private companies implies that the general public has more power to influence management and governance-related decisions
  • The top 2 shareholders own 53% of the company
  • 12% of Macmahon Holdings is held by Institutions

To get a sense of who is truly in control of Macmahon Holdings Limited (ASX:MAH), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 49% to be precise, is private companies. Put another way, the group faces the maximum upside potential (or downside risk).

And last week, private companies endured the biggest losses as the stock fell by 10%.

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

Check out our latest analysis for Macmahon Holdings

ASX:MAH Ownership Breakdown March 17th 2023

What Does The Institutional Ownership Tell Us About Macmahon Holdings?

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 Macmahon Holdings. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Macmahon Holdings' earnings history below. Of course, the future is what really matters.

ASX:MAH Earnings and Revenue Growth March 17th 2023

We note that hedge funds don't have a meaningful investment in Macmahon Holdings. Amman Mineral Contractors (Singapore) Pte. Ltd. is currently the largest shareholder, with 45% of shares outstanding. Paradice Investment Management Pty Ltd. is the second largest shareholder owning 7.2% of common stock, and CPU Share Plans Pty Limited holds about 2.6% of the company stock.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Macmahon Holdings

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.

We can see that insiders own shares in Macmahon Holdings Limited. In their own names, insiders own AU$5.9m worth of stock in the AU$273m company. Some would say this shows alignment of interests between shareholders and the board, though we generally prefer to see bigger insider holdings. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 37% stake in Macmahon Holdings. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Company Ownership

Our data indicates that Private Companies hold 49%, of the company's shares. 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. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Macmahon Holdings 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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