Both retail investors who control a good portion of Nick Scali Limited (ASX:NCK) along with institutions must be dismayed after last week's 8.8% decrease

Key Insights

• Significant control over Nick Scali by retail investors implies that the general public has more power to influence management and governance-related decisions
• 50% of the business is held by the top 12 shareholders
• Recent sales by insiders

A look at the shareholders of Nick Scali Limited (ASX:NCK) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are retail investors with 43% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Following a 8.8% decrease in the stock price last week, retail investors suffered the most losses, but institutions who own 38% stock also took a hit.

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

View our latest analysis for Nick Scali

What Does The Institutional Ownership Tell Us About Nick Scali?

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.

As you can see, institutional investors have a fair amount of stake in Nick Scali. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Nick Scali's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Nick Scali. Looking at our data, we can see that the largest shareholder is Scali Consolidated Pty Ltd with 14% of shares outstanding. For context, the second largest shareholder holds about 6.7% of the shares outstanding, followed by an ownership of 6.0% by the third-largest shareholder.

After doing some more digging, we found that the top 12 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

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 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 Nick Scali

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.

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 Nick Scali Limited insiders own under 1% of the company. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. It appears that the board holds about AU$5.8m worth of stock. This compares to a market capitalization of AU$878m. We generally like to see a board more invested. However it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 43% stake in Nick Scali. 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 19%, of the company's shares. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Nick Scali better, we need to consider many other factors. For instance, we've identified 1 warning sign for Nick Scali that you should be aware of.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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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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.