Action Construction Equipment Limited's (NSE:ACE) CEO Vijay Agarwal is the most upbeat insider, and their holdings increased by 9.4% last week

Key Insights

• Action Construction Equipment's significant insider ownership suggests inherent interests in company's expansion
• 53% of the business is held by the top 2 shareholders
• Institutions own 10% of Action Construction Equipment

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A look at the shareholders of Action Construction Equipment Limited (NSE:ACE) can tell us which group is most powerful. We can see that individual insiders own the lion's share in the company with 68% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, insiders scored the highest last week as the company hit ₹150b market cap following a 9.4% gain in the stock.

In the chart below, we zoom in on the different ownership groups of Action Construction Equipment.

Check out our latest analysis for Action Construction Equipment

What Does The Institutional Ownership Tell Us About Action Construction Equipment?

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.

As you can see, institutional investors have a fair amount of stake in Action Construction Equipment. 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 Action Construction Equipment'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 Action Construction Equipment. With a 29% stake, CEO Vijay Agarwal is the largest shareholder. With 25% and 6.2% of the shares outstanding respectively, Mona Agarwal and Sorab Agarwal are the second and third largest shareholders. Note that two of the top three shareholders are also Senior Key Executive and Member of the Board of Directors, respectively, once again pointing to significant ownership by company insiders.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 53% stake.

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. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Action Construction Equipment

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

It seems that insiders own more than half the Action Construction Equipment Limited stock. This gives them a lot of power. Given it has a market cap of ₹150b, that means insiders have a whopping ₹102b worth of shares in their own names. Most would be pleased to see the board is investing alongside them. You may wish to discover if they have been buying or selling.

General Public Ownership

With a 21% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Action Construction Equipment. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Action Construction Equipment better, we need to consider many other factors.

Many find it useful to take an in depth look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.