Martinrea International Inc. (TSE:MRE) surges 14%; individual investors who own 55% shares profited along with institutions

By
Simply Wall St
Published
May 08, 2022
TSX:MRE
Source: Shutterstock

If you want to know who really controls Martinrea International Inc. (TSE:MRE), then you'll have to look at the makeup of its share registry. With 55% stake, individual investors possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While individual investors were the group that reaped the most benefits after last week’s 14% price gain, institutions also received a 30% cut.

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

See our latest analysis for Martinrea International

ownership-breakdown
TSX:MRE Ownership Breakdown May 8th 2022

What Does The Institutional Ownership Tell Us About Martinrea International?

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.

We can see that Martinrea International 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 Martinrea International, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
TSX:MRE Earnings and Revenue Growth May 8th 2022

Hedge funds don't have many shares in Martinrea International. The company's largest shareholder is TMRE Investors, LLC, with ownership of 13%. Connor, Clark & Lunn Investment Management Ltd. is the second largest shareholder owning 9.4% of common stock, and Dimensional Fund Advisors LP holds about 5.5% of the company stock.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Martinrea International

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.

We can report that insiders do own shares in Martinrea International Inc.. It has a market capitalization of just CA$700m, and insiders have CA$12m worth of shares, in their own names. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public -- including retail investors -- own 55% of Martinrea International. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Private Company Ownership

Our data indicates that Private Companies hold 13%, of the company's shares. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example - Martinrea International has 3 warning signs (and 1 which is concerning) we think you should know about.

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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