Painful week for private companies invested in Equital Ltd. (TLV:EQTL) after 7.7% drop, institutions also suffered losses

Key Insights

• Significant control over Equital by private companies implies that the general public has more power to influence management and governance-related decisions
• A total of 3 investors have a majority stake in the company with 57% ownership
• 19% of Equital is held by insiders

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Every investor in Equital Ltd. (TLV:EQTL) should be aware of the most powerful shareholder groups. With 44% stake, private companies possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

While the holdings of private companies took a hit after last week’s 7.7% price drop, institutions with their 23% holdings also suffered.

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

Check out our latest analysis for Equital

What Does The Institutional Ownership Tell Us About Equital?

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 Equital 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. 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 Equital, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in Equital. United Kingsway Ltd. is currently the largest shareholder, with 31% of shares outstanding. The second and third largest shareholders are Haim Tsuff and J.O.E.L. Jerusalem Oil Exploration Ltd., with an equal amount of shares to their name at 13%.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Equital

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.

Our most recent data indicates that insiders own a reasonable proportion of Equital Ltd.. Insiders own ₪1.0b worth of shares in the ₪5.5b company. That's quite meaningful. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 15% stake in the company, and hence can't easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Company Ownership

Our data indicates that Private Companies hold 44%, of the company's shares. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

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

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.