G City Ltd's (TLV:GCT) market cap dropped ₪189m last week; Public companies bore the brunt

Key Insights

• G City's significant public companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 2 shareholders own 56% of the company
• Institutions own 25% of G City

If you want to know who really controls G City Ltd (TLV:GCT), then you'll have to look at the makeup of its share registry. We can see that public companies own the lion's share in the company with 46% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As market cap fell to ₪2.5b last week, public companies would have faced the highest losses than any other shareholder groups of the company.

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

Check out our latest analysis for G City

What Does The Institutional Ownership Tell Us About G City?

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 G City. 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 G City's historic earnings and revenue below, but keep in mind there's always more to the story.

G City is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Norstar Holdings Inc with 46% of shares outstanding. Menora Mivtachim Provident Funds is the second largest shareholder owning 9.3% of common stock, and Shlomo Eliahu Holding Ltd, Asset Management Arm holds about 6.7% of the company stock.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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

Insider Ownership Of G City

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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our data suggests that insiders own under 1% of G City Ltd in their own names. It seems the board members have no more than ₪12m worth of shares in the ₪2.5b company. Many investors in smaller companies prefer to see the board more heavily invested. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 28% ownership, the general public, mostly comprising of individual investors, have some degree of sway over G 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 46% of G City stock. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with G City (at least 1 which makes us a bit uncomfortable) , and understanding them should be part of your investment process.

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.