What Is The Ownership Structure Like For Dorel Industries Inc. (TSE:DII.B)?

By
Simply Wall St
Published
October 30, 2020
TSX:DII.B
Source: Shutterstock

A look at the shareholders of Dorel Industries Inc. (TSE:DII.B) can tell us which group is most powerful. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, 'Don’t tell me what you think, tell me what you have in your portfolio.

Dorel Industries is not a large company by global standards. It has a market capitalization of CA$516m, which means it wouldn't have the attention of many institutional investors. In the chart below, we can see that institutional investors have bought into the company. Let's take a closer look to see what the different types of shareholders can tell us about Dorel Industries.

View our latest analysis for Dorel Industries

ownership-breakdown
TSX:DII.B Ownership Breakdown October 30th 2020

What Does The Institutional Ownership Tell Us About Dorel Industries?

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.

We can see that Dorel Industries does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Dorel Industries' earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
TSX:DII.B Earnings and Revenue Growth October 30th 2020

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. Dorel Industries is not owned by hedge funds. FMR LLC is currently the company's largest shareholder with 16% of shares outstanding. For context, the second largest shareholder holds about 13% of the shares outstanding, followed by an ownership of 8.5% by the third-largest shareholder. Additionally, the company's CEO Martin Schwartz directly holds 5.1% of the total shares outstanding.

Our research also brought to light the fact that roughly 50% of the company is controlled by the top 5 shareholders suggesting that these owners wield significant influence on the business.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Dorel Industries

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 information suggests that insiders maintain a significant holding in Dorel Industries Inc.. Insiders own CA$99m worth of shares in the CA$516m company. 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 holds a 25% stake in Dorel Industries. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

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 Dorel Industries , and understanding them should be part of your investment process.

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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