Insiders of Codan Limited (ASX:CDA) have had a great week after last week's AU$123m gain and they haven't stopped buying

Key Insights

• Insiders appear to have a vested interest in Codan's growth, as seen by their sizeable ownership
• The top 10 shareholders own 51% of the company
• Insiders have bought recently

If you want to know who really controls Codan Limited (ASX:CDA), 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 45% to be precise, is individual insiders. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Insiders who purchased recently should be particularly happy after the stock gained 9.0% in the past week.

In the chart below, we zoom in on the different ownership groups of Codan.

View our latest analysis for Codan

What Does The Institutional Ownership Tell Us About Codan?

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 Codan. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Codan's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Codan. Looking at our data, we can see that the largest shareholder is David Uhrig with 16% of shares outstanding. The second and third largest shareholders are Ian Wall and P. Wall, with an equal amount of shares to their name at 9.6%.

On further inspection, we found that more than half the company's shares are owned by the top 10 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Codan

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 Codan Limited. Insiders have a AU$630m stake in this AU$1.4b business. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

With a 40% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Codan. 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Codan , and understanding them should be part of your investment process.

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.