Institutional investors control 52% of Mullen Group Ltd. (TSE:MTL) and were rewarded last week after stock increased 7.8%

By
Simply Wall St
Published
March 22, 2022
TSX:MTL
Source: Shutterstock

Every investor in Mullen Group Ltd. (TSE:MTL) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are institutions with 52% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And things are looking up for institutional investors after the company gained CA$89m in market cap last week. One-year return to shareholders is currently 10% and last week’s gain was the icing on the cake.

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

View our latest analysis for Mullen Group

ownership-breakdown
TSX:MTL Ownership Breakdown March 22nd 2022

What Does The Institutional Ownership Tell Us About Mullen Group?

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.

As you can see, institutional investors have a fair amount of stake in Mullen Group. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Mullen Group, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
TSX:MTL Earnings and Revenue Growth March 22nd 2022

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. Mullen Group is not owned by hedge funds. The company's largest shareholder is QV Investors Inc., with ownership of 10%. Meanwhile, the second and third largest shareholders, hold 10% and 10.0%, of the shares outstanding, respectively. Furthermore, CEO Murray Mullen is the owner of 5.2% of the company's shares.

After doing some more digging, we found that the top 14 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. 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 Mullen 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.

Our most recent data indicates that insiders own some shares in Mullen Group Ltd.. As individuals, the insiders collectively own CA$73m worth of the CA$1.2b company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 42% stake in the company, and hence can't easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

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. To that end, you should be aware of the 3 warning signs we've spotted with Mullen Group .

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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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