Temple & Webster Group Ltd's (ASX:TPW) latest 11% decline adds to one-year losses, institutional investors may consider drastic measures

By
Simply Wall St
Published
April 11, 2022
ASX:TPW
Source: Shutterstock

A look at the shareholders of Temple & Webster Group Ltd (ASX:TPW) can tell us which group is most powerful. We can see that institutions own the lion's share in the company with 53% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And institutional investors endured the highest losses after the company's share price fell by 11% last week. The recent loss, which adds to a one-year loss of 39% for stockholders, may not sit well with this group of investors. Also referred to as "smart money", institutions have a lot of sway over how a stock's price moves. As a result, if the decline continues, institutional investors may be pressured to sell Temple & Webster Group which might hurt individual investors.

In the chart below, we zoom in on the different ownership groups of Temple & Webster Group.

See our latest analysis for Temple & Webster Group

ownership-breakdown
ASX:TPW Ownership Breakdown April 11th 2022

What Does The Institutional Ownership Tell Us About Temple & Webster 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.

As you can see, institutional investors have a fair amount of stake in Temple & Webster Group. 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 Temple & Webster Group's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
ASX:TPW Earnings and Revenue Growth April 11th 2022

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. It would appear that 12% of Temple & Webster Group shares are controlled by hedge funds. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Looking at our data, we can see that the largest shareholder is Kinderhook Partners LLC with 12% of shares outstanding. AllianceBernstein L.P. is the second largest shareholder owning 11% of common stock, and Netwealth Investments Ltd. holds about 6.9% of the company stock. In addition, we found that Mark Coulter, the CEO has 2.6% of the shares allocated to their name.

We also observed that the top 8 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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 Temple & Webster Group

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.

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.

Shareholders would probably be interested to learn that insiders own shares in Temple & Webster Group Ltd. It has a market capitalization of just AU$753m, and insiders have AU$64m worth of shares, in their own names. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 22% stake in Temple & Webster Group. 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

It seems that Private Companies own 5.1%, of the Temple & Webster Group stock. 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 - Temple & Webster Group has 2 warning signs we think you should be aware of.

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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