Fairfax India Holdings Corporation's (TSE:FIH.U) market cap surged US$164m last week, public companies who have a lot riding on the company were rewarded

Key Insights

• The considerable ownership by public companies in Fairfax India Holdings indicates that they collectively have a greater say in management and business strategy
• 55% of the business is held by the top 2 shareholders
• Recent purchases by insiders

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To get a sense of who is truly in control of Fairfax India Holdings Corporation (TSE:FIH.U), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 40% to be precise, is public companies. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, public companies collectively scored the highest last week as the company hit US$2.7b market cap following a 6.5% gain in the stock.

In the chart below, we zoom in on the different ownership groups of Fairfax India Holdings.

Check out our latest analysis for Fairfax India Holdings

What Does The Institutional Ownership Tell Us About Fairfax India Holdings?

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.

As you can see, institutional investors have a fair amount of stake in Fairfax India Holdings. 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 Fairfax India Holdings' earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Fairfax India Holdings. Our data shows that Fairfax Financial Holdings Limited is the largest shareholder with 40% of shares outstanding. With 15% and 2.5% of the shares outstanding respectively, OMERS Administration Corporation and EdgePoint Investment Group Inc. are the second and third largest shareholders.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 55% stake.

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 as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Fairfax India Holdings

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. 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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own less than 1% of Fairfax India Holdings Corporation. However, it's possible that insiders might have an indirect interest through a more complex structure. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own US$11m worth of shares. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 33% stake in Fairfax India Holdings. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Public Company Ownership

It appears to us that public companies own 40% of Fairfax India Holdings. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

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 - Fairfax India Holdings has 2 warning signs (and 1 which shouldn't be ignored) we think you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.