Stock Analysis

Institutions along with individual investors who hold considerable shares inMTY Food Group Inc. (TSE:MTY) come under pressure; lose 4.9% of holdings value

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Key Insights

  • The considerable ownership by individual investors in MTY Food Group indicates that they collectively have a greater say in management and business strategy
  • The top 25 shareholders own 48% of the company
  • Insider ownership in MTY Food Group is 17%

To get a sense of who is truly in control of MTY Food Group Inc. (TSE:MTY), it is important to understand the ownership structure of the business. 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.

Following a 4.9% decrease in the stock price last week, individual investors suffered the most losses, but institutions who own 31% stock also took a hit.

Let's delve deeper into each type of owner of MTY Food Group, beginning with the chart below.

Check out our latest analysis for MTY Food Group

TSX:MTY Ownership Breakdown March 14th 2023

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.

MTY Food Group already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 MTY Food Group's earnings history below. Of course, the future is what really matters.

TSX:MTY Earnings and Revenue Growth March 14th 2023

We note that hedge funds don't have a meaningful investment in MTY Food Group. 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. In comparison, the second and third largest shareholders hold about 10% and 8.7% of the 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 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

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

It seems insiders own a significant proportion of MTY Food Group Inc.. Insiders own CA$268m worth of shares in the CA$1.6b company. That's quite meaningful. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public -- including retail investors -- own 51% of MTY Food Group. 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.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. For instance, we've identified 3 warning signs for MTY Food Group (1 is a bit concerning) that you should be aware of.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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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Find out whether MTY Food Group is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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