Could The Azorim-Investment, Development & Construction Co. Ltd (TLV:AZRM) Ownership Structure Tell Us Something Useful?

Every investor in Azorim-Investment, Development & Construction Co. Ltd (TLV:AZRM) should be aware of the most powerful shareholder groups. Institutions often own shares in more established companies, while it’s not unusual to see insiders own a fair bit of smaller companies. Warren Buffett said that he likes ‘a business with enduring competitive advantages that is run by able and owner-oriented people’. So it’s nice to see some insider ownership, because it may suggest that management is owner-oriented.

Azorim-Investment Development & Construction is not a large company by global standards. It has a market capitalization of ₪1.8b, which means it wouldn’t have the attention of many institutional investors. In the chart below, we can see that institutions own shares in the company. We can zoom in on the different ownership groups, to learn more about Azorim-Investment Development & Construction.

See our latest analysis for Azorim-Investment Development & Construction

TASE:AZRM Ownership Summary, January 25th 2020
TASE:AZRM Ownership Summary, January 25th 2020

What Does The Institutional Ownership Tell Us About Azorim-Investment Development & Construction?

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.

Azorim-Investment Development & Construction already has institutions on the share registry. Indeed, they own 23% of the company. 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 Azorim-Investment Development & Construction’s earnings history, below. Of course, the future is what really matters.

TASE:AZRM Income Statement, January 25th 2020
TASE:AZRM Income Statement, January 25th 2020

Azorim-Investment Development & Construction is not owned by hedge funds. The company’s largest shareholder is Chaim Friedman, with ownership of 64%, This essentially means that they have extensive influence, if not outright control, over the future of the corporation. The second and third largest shareholders are The Phoenix Pension and Provident Fund Ltd. and Shlomo Eliahu Holding Ltd, Asset Management Arm, holding 6.4% and 4.9%, respectively.

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. We’re not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Azorim-Investment Development & Construction

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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 information suggests that insiders own more than half of Azorim-Investment, Development & Construction Co. Ltd. This gives them effective control of the company. That means they own ₪1.1b worth of shares in the ₪1.8b company. That’s quite meaningful. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they have been buying or selling.

General Public Ownership

The general public, with a 13% stake in the company, will not 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. Case in point: We’ve spotted 3 warning signs for Azorim-Investment Development & Construction you should be aware of, and 1 of them is concerning.

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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

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