Institutions own 38% of Constellation Software Inc. (TSE:CSU) shares but individual investors control 55% of the company

By
Simply Wall St
Published
April 16, 2022
TSX:CSU
Source: Shutterstock

A look at the shareholders of Constellation Software Inc. (TSE:CSU) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are individual investors with 55% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And institutions on the other hand have a 38% ownership in the company. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time.

Let's delve deeper into each type of owner of Constellation Software, beginning with the chart below.

Check out our latest analysis for Constellation Software

ownership-breakdown
TSX:CSU Ownership Breakdown April 16th 2022

What Does The Institutional Ownership Tell Us About Constellation Software?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

We can see that Constellation Software does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Constellation Software's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
TSX:CSU Earnings and Revenue Growth April 16th 2022

Hedge funds don't have many shares in Constellation Software. Our data shows that FMR LLC is the largest shareholder with 4.3% of shares outstanding. The Vanguard Group, Inc. is the second largest shareholder owning 3.0% of common stock, and Akre Capital Management, LLC holds about 3.0% of the company stock. Additionally, the company's CEO Mark Leonard directly holds 2.0% of the total shares outstanding.

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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Constellation Software

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.

We can see that insiders own shares in Constellation Software Inc.. Insiders own CA$3.2b worth of shares (at current prices). 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, who are usually individual investors, hold a substantial 55% stake in Constellation Software, 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:

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 1 warning sign for Constellation Software 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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