What Kind Of Investors Own Most Of Auto Trader Group plc (LON:AUTO)?

By
Simply Wall St
Published
March 14, 2021
LSE:AUTO

If you want to know who really controls Auto Trader Group plc (LON:AUTO), then you'll have to look at the makeup of its share registry. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. We also tend to see lower insider ownership in companies that were previously publicly owned.

With a market capitalization of UK£5.4b, Auto Trader Group is rather large. We'd expect to see institutional investors on the register. Companies of this size are usually well known to retail investors, too. Taking a look at our data on the ownership groups (below), it seems that institutions own shares in the company. Let's take a closer look to see what the different types of shareholders can tell us about Auto Trader Group.

See our latest analysis for Auto Trader Group

ownership-breakdown
LSE:AUTO Ownership Breakdown March 14th 2021

What Does The Institutional Ownership Tell Us About Auto Trader 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.

As you can see, institutional investors have a fair amount of stake in Auto Trader Group. 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 Auto Trader Group's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
LSE:AUTO Earnings and Revenue Growth March 14th 2021

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. Auto Trader Group is not owned by hedge funds. BlackRock, Inc. is currently the company's largest shareholder with 10% of shares outstanding. In comparison, the second and third largest shareholders hold about 8.4% and 8.3% of the stock.

Looking at the shareholder registry, we can see that 52% of the ownership is controlled by the top 13 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 Auto Trader 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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

I can report that insiders do own shares in Auto Trader Group plc. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around UK£55m worth of shares (at current prices). Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

The general public holds a 15% stake in Auto Trader Group. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Auto Trader Group better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Auto Trader Group you should know about.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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. 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.
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