Stock Analysis

Could The The Keg Royalties Income Fund (TSE:KEG.UN) Ownership Structure Tell Us Something Useful?

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TSX:KEG.UN
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Every investor in The Keg Royalties Income Fund (TSE:KEG.UN) should be aware of the most powerful shareholder groups. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies. Companies that used to be publicly owned tend to have lower insider ownership.

Keg Royalties Income Fund is not a large company by global standards. It has a market capitalization of CA$134m, which means it wouldn't have the attention of many institutional investors. Our analysis of the ownership of the company, below, shows 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 Keg Royalties Income Fund.

See our latest analysis for Keg Royalties Income Fund

ownership-breakdown
TSX:KEG.UN Ownership Breakdown November 30th 2020

What Does The Institutional Ownership Tell Us About Keg Royalties Income Fund?

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.

Keg Royalties Income Fund already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Keg Royalties Income Fund's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
TSX:KEG.UN Earnings and Revenue Growth November 30th 2020

We note that hedge funds don't have a meaningful investment in Keg Royalties Income Fund. Keg Restaurants Ltd. is currently the largest shareholder, with 32% of shares outstanding. For context, the second largest shareholder holds about 13% of the shares outstanding, followed by an ownership of 2.2% by the third-largest shareholder.

A deeper look at our ownership data shows that the top 10 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. As far I can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Keg Royalties Income Fund

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.

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 most recent data indicates that insiders own less than 1% of The Keg Royalties Income Fund. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. It has a market capitalization of just CA$134m, and the board has only CA$1.2m worth of shares in their own names. I 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 retail investors -- own 50% of Keg Royalties Income Fund. This size of ownership gives retail investors collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Private Company Ownership

Our data indicates that Private Companies hold 32%, of the company's shares. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

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 - Keg Royalties Income Fund has 2 warning signs (and 1 which is a bit unpleasant) we think you should know about.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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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