Do Insiders Own Lots Of Shares In Hiron-Trade Investments & Industrial Buildings Ltd (TLV:HRON)?

By
Simply Wall St
Published
May 25, 2021
TASE:HRON
Source: Shutterstock

A look at the shareholders of Hiron-Trade Investments & Industrial Buildings Ltd (TLV:HRON) can tell us which group is most powerful. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. I quite like to see at least a little bit of insider ownership. As Charlie Munger said 'Show me the incentive and I will show you the outcome.

With a market capitalization of ₪614m, Hiron-Trade Investments & Industrial Buildings is a small cap stock, so it might not be well known by many institutional investors. Our analysis of the ownership of the company, below, shows that institutions own shares in the company. We can zoom in on the different ownership groups, to learn more about Hiron-Trade Investments & Industrial Buildings.

See our latest analysis for Hiron-Trade Investments & Industrial Buildings

ownership-breakdown
TASE:HRON Ownership Breakdown May 26th 2021

What Does The Institutional Ownership Tell Us About Hiron-Trade Investments & Industrial Buildings?

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.

Hiron-Trade Investments & Industrial Buildings already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Hiron-Trade Investments & Industrial Buildings, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
TASE:HRON Earnings and Revenue Growth May 26th 2021

We note that hedge funds don't have a meaningful investment in Hiron-Trade Investments & Industrial Buildings. With a 24% stake, CEO Arie Amir is the largest shareholder. With 23% and 19% of the shares outstanding respectively, Dan Rozner and Ronit Amir Roth are the second and third largest shareholders. Note that two of the top three shareholders are also Unit CEO and Chairman of the Board, respectively, once again pointing to significant ownership by company insiders.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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 Hiron-Trade Investments & Industrial Buildings

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 Hiron-Trade Investments & Industrial Buildings Ltd. This gives them effective control of the company. That means they own ₪494m worth of shares in the ₪614m company. That's quite meaningful. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

With a 11% ownership, the general public have some degree of sway over Hiron-Trade Investments & Industrial Buildings. 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.

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. For instance, we've identified 1 warning sign for Hiron-Trade Investments & Industrial Buildings that 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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