Stock Analysis

Man Group Limited's (LON:EMG) latest 5.7% decline adds to one-year losses, institutional investors may consider drastic measures

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LSE:EMG
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Every investor in Man Group Limited (LON:EMG) should be aware of the most powerful shareholder groups. We can see that institutions own the lion's share in the company with 59% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And institutional investors saw their holdings value drop by 5.7% last week. Needless to say, the recent loss which further adds to the one-year loss to shareholders of 3.8% might not go down well especially with this category of shareholders. Also referred to as "smart money", institutions have a lot of sway over how a stock's price moves. As a result, if the decline continues, institutional investors may be pressured to sell Man Group which might hurt individual investors.

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

See our latest analysis for Man Group

ownership-breakdown
LSE:EMG Ownership Breakdown December 9th 2022

What Does The Institutional Ownership Tell Us About Man Group?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

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

earnings-and-revenue-growth
LSE:EMG Earnings and Revenue Growth December 9th 2022

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Hedge funds don't have many shares in Man Group. The company's largest shareholder is Silchester International Investors LLP, with ownership of 10%. Meanwhile, the second and third largest shareholders, hold 7.2% and 5.2%, of the shares outstanding, respectively. Furthermore, CEO Luke Ellis is the owner of 0.5% of the company's shares.

Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 21 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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

Insider Ownership Of Man Group

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 Man Group Limited. It is a pretty big company, so it would be possible for board members to own a meaningful interest in the company, without owning much of a proportional interest. In this case, they own around UK£19m worth of shares (at current prices). It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

The general public-- including retail investors -- own 40% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Man Group better, we need to consider many other factors. Be aware that Man Group is showing 2 warning signs in our investment analysis , and 1 of those is concerning...

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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