Both individual investors who control a good portion of MTY Food Group Inc. (TSE:MTY) along with institutions must be dismayed after last week's 4.9% decrease

By
Simply Wall St
Published
December 15, 2021
TSX:MTY
Source: Shutterstock

Every investor in MTY Food Group Inc. (TSE:MTY) should be aware of the most powerful shareholder groups. With 51% stake, individual investors possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While institutions who own 30% came under pressure after market cap dropped to CA$1.4b last week,individual investors took the most losses.

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

View our latest analysis for MTY Food Group

ownership-breakdown
TSX:MTY Ownership Breakdown December 15th 2021

What Does The Institutional Ownership Tell Us About MTY Food Group?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

We can see that MTY Food Group 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. 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 MTY Food Group's historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
TSX:MTY Earnings and Revenue Growth December 15th 2021

MTY Food Group is not owned by hedge funds. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In MTY Food Group's case, its President, Stanley Ma, is the largest shareholder, holding 16% of shares outstanding. FMR LLC is the second largest shareholder owning 13% of common stock, and Mawer Investment Management Limited holds about 2.6% of the company stock.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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 a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of MTY Food Group

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

Our information suggests that insiders maintain a significant holding in MTY Food Group Inc.. It is very interesting to see that insiders have a meaningful CA$276m stake in this CA$1.4b business. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a substantial 51% stake in MTY Food Group, suggesting it is a fairly popular stock. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand MTY Food Group better, we need to consider many other factors. Be aware that MTY Food Group is showing 2 warning signs in our investment analysis , and 1 of those doesn't sit too well with us...

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.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.