Institutional investors may adopt severe steps after SiteMinder Limited's (ASX:SDR) latest 10.0% drop adds to a year losses
- Given the large stake in the stock by institutions, SiteMinder's stock price might be vulnerable to their trading decisions
- The top 7 shareholders own 51% of the company
- 16% of SiteMinder is held by insiders
If you want to know who really controls SiteMinder Limited (ASX:SDR), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 57% to be precise, is institutions. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
As a result, institutional investors endured the highest losses last week after market cap fell by AU$107m. This set of investors may especially be concerned about the current loss, which adds to a one-year loss of 23% for shareholders. Often called “market makers”, institutions wield significant power in influencing the price dynamics of any stock. As a result, if the downtrend continues, institutions may face pressures to sell SiteMinder, which might have negative implications on individual investors.
Let's delve deeper into each type of owner of SiteMinder, beginning with the chart below.
See our latest analysis for SiteMinder
What Does The Institutional Ownership Tell Us About SiteMinder?
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 SiteMinder. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see SiteMinder's historic earnings and revenue below, but keep in mind there's always more to the story.
Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. We note that hedge funds don't have a meaningful investment in SiteMinder. Looking at our data, we can see that the largest shareholder is AustralianSuper Pty. Ltd. with 11% of shares outstanding. With 11% and 7.7% of the shares outstanding respectively, BlackRock, Inc. and First Sentier Investors (Australia) IM Ltd are the second and third largest shareholders. Furthermore, CEO Sankar Narayan is the owner of 2.6% of the company's shares.
On further inspection, we found that more than half the company's shares are owned by the top 7 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.
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 SiteMinder
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.
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 insiders own a significant proportion of SiteMinder Limited. Insiders have a AU$149m stake in this AU$960m business. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.
General Public Ownership
The general public-- including retail investors -- own 18% 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 Equity Ownership
Private equity firms hold a 6.1% stake in SiteMinder. This suggests they can be influential in key policy decisions. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.
It's always worth thinking about the different groups who own shares in a company. But to understand SiteMinder better, we need to consider many other factors.
I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.
Ultimately the future is most important. You can access this free report on analyst forecasts for the company.
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.
SiteMinder Limited develops, markets, and sells online guest acquisition platform and commerce solutions for accommodation providers in Australia, the Asia Pacific, Europe, the Middle East, Africa, and the Americas.
Excellent balance sheet with high growth potential.