Painful week for retail investors invested in NFI Group Inc. (TSE:NFI) after 8.1% drop, institutions also suffered losses

Key Insights

• NFI Group's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• 48% of the business is held by the top 25 shareholders
• 23% of NFI Group is held by Institutions

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To get a sense of who is truly in control of NFI Group Inc. (TSE:NFI), it is important to understand the ownership structure of the business. We can see that retail investors own the lion's share in the company with 50% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While institutions, who own 23% shares weren’t spared from last week’s CA$118m market cap drop, retail investors as a group suffered the maximum losses

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

Check out our latest analysis for NFI Group

What Does The Institutional Ownership Tell Us About NFI Group?

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.

NFI Group already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 NFI Group, (below). Of course, keep in mind that there are other factors to consider, too.

Our data indicates that hedge funds own 20% of NFI Group. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Our data shows that Coliseum Capital Management, LLC is the largest shareholder with 20% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 7.9% and 5.5%, of the shares outstanding, respectively.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

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

Insider Ownership Of NFI Group

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.

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.

Our data suggests that insiders own under 1% of NFI Group Inc. in their own names. It has a market capitalization of just CA$1.4b, and the board has only CA$14m worth of shares in their own names. 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, mostly comprising of individual investors, collectively holds 50% of NFI Group shares. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Public Company Ownership

It appears to us that public companies own 5.5% of NFI Group. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

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