With 41% ownership, Harvey Norman Holdings Limited (ASX:HVN) insiders have a lot at stake

Key Insights

• Insiders appear to have a vested interest in Harvey Norman Holdings' growth, as seen by their sizeable ownership
• The top 2 shareholders own 52% of the company
• Institutional ownership in Harvey Norman Holdings is 12%

If you want to know who really controls Harvey Norman Holdings Limited (ASX:HVN), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are individual insiders with 41% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

With such a notable stake in the company, insiders would be highly incentivised to make value accretive decisions.

In the chart below, we zoom in on the different ownership groups of Harvey Norman Holdings.

Check out our latest analysis for Harvey Norman Holdings

What Does The Institutional Ownership Tell Us About Harvey Norman Holdings?

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.

We can see that Harvey Norman Holdings does have institutional investors; and they hold a good portion of the company's stock. 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 Harvey Norman Holdings, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Harvey Norman Holdings. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Harvey Norman Holdings' case, its Top Key Executive, Gerald Harvey, is the largest shareholder, holding 36% of shares outstanding. Dimbulu Pty Ltd is the second largest shareholder owning 16% of common stock, and The Vanguard Group, Inc. holds about 3.0% of the company stock. Additionally, the company's CEO Kay Lesley Page directly holds 1.6% of the total shares outstanding.

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.

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 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 Harvey Norman Holdings

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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

It seems insiders own a significant proportion of Harvey Norman Holdings Limited. It is very interesting to see that insiders have a meaningful AU$2.4b stake in this AU$6.0b business. 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, who are usually individual investors, hold a 29% stake in Harvey Norman Holdings. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

Our data indicates that Private Companies hold 18%, 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. Case in point: We've spotted 2 warning signs for Harvey Norman Holdings you should be aware of.

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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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.