Painful week for public companies invested in Airport City Ltd. (TLV:ARPT) after 3.3% drop, institutions also suffered losses

Key Insights

• The considerable ownership by public companies in Airport City indicates that they collectively have a greater say in management and business strategy
• The largest shareholder of the company is Equital Ltd. with a 51% stake
• Institutions own 29% of Airport City

We've discovered 2 warning signs about Airport City. View them for free.

To get a sense of who is truly in control of Airport City Ltd. (TLV:ARPT), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 51% to be precise, is public companies. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While institutions, who own 29% shares weren’t spared from last week’s ₪218m market cap drop, public companies as a group suffered the maximum losses

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

See our latest analysis for Airport City

What Does The Institutional Ownership Tell Us About Airport City?

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.

Airport City already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Airport City's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Airport City. Equital Ltd. is currently the company's largest shareholder with 51% of shares outstanding. This implies that they have majority interest control of the future of the company. The second and third largest shareholders are Harel Pensions and Gemel Ltd. and Clal Financial Management Ltd, with an equal amount of shares to their name at 7.2%.

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

Insider Ownership Of Airport City

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.

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 less than 1% of Airport City Ltd.. 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 ₪2.3m worth of shares (at current prices). It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

With a 21% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Airport City. 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.

Public Company Ownership

Public companies currently own 51% of Airport City stock. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 2 warning signs for Airport City you should be aware of.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.