Private companies who have a significant stake must be disappointed along with institutions after Carmel Corp Ltd.'s (TLV:CRML) market cap dropped by ₪52m

Key Insights

• The considerable ownership by private companies in Carmel indicates that they collectively have a greater say in management and business strategy
• 54% of the business is held by the top 4 shareholders
• Institutional ownership in Carmel is 32%

Every investor in Carmel Corp Ltd. (TLV:CRML) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 51% to be precise, is private companies. Put another way, the group faces the maximum upside potential (or downside risk).

While institutions, who own 32% shares weren’t spared from last week’s ₪52m market cap drop, private companies as a group suffered the maximum losses

Let's take a closer look to see what the different types of shareholders can tell us about Carmel.

Check out our latest analysis for Carmel

What Does The Institutional Ownership Tell Us About Carmel?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

Carmel already has institutions on the share registry. Indeed, they own a respectable stake in 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. 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 Carmel's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Carmel. KEDMA CARMEL INVESTMENTS (2013) LTD is currently the largest shareholder, with 28% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 9.5% and 8.6%, of the shares outstanding, respectively.

To make our study more interesting, we found that the top 4 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Carmel

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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 Carmel Corp Ltd.. In their own names, insiders own ₪15m worth of stock in the ₪440m company. This shows at least some alignment, but we usually like to see larger insider holdings. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 13% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Carmel. 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.

Private Company Ownership

Our data indicates that Private Companies hold 51%, of the company's shares. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should be aware of the 1 warning sign we've spotted with Carmel .

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.