CEO Karunakar Baddam, Apollo Micro Systems Limited's (NSE:APOLLO) largest shareholder sees value of holdings go down 14% after recent drop

Key Insights

• Significant insider control over Apollo Micro Systems implies vested interests in company growth
• The largest shareholder of the company is Karunakar Baddam with a 55% stake
• Institutional ownership in Apollo Micro Systems is 14%

A look at the shareholders of Apollo Micro Systems Limited (NSE:APOLLO) can tell us which group is most powerful. We can see that individual insiders own the lion's share in the company with 57% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As market cap fell to ₹40b last week, insiders would have faced the highest losses than any other shareholder groups of the company.

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

Check out our latest analysis for Apollo Micro Systems

What Does The Institutional Ownership Tell Us About Apollo Micro Systems?

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 Apollo Micro Systems. 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 Apollo Micro Systems' historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Apollo Micro Systems. With a 55% stake, CEO Karunakar Baddam is the largest shareholder. This implies that they possess majority interests and have significant control over the company. Investors usually consider it a good sign when the company leadership has such a significant stake, as this is widely perceived to increase the chance that the management will act in the best interests of the company. Meanwhile, the second and third largest shareholders, hold 6.2% and 3.9%, of the shares outstanding, respectively.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Apollo Micro Systems

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. 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.

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.

Our information suggests that insiders own more than half of Apollo Micro Systems Limited. This gives them effective control of the company. So they have a ₹23b stake in this ₹40b business. 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

The general public-- including retail investors -- own 29% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Apollo Micro Systems is showing 2 warning signs in our investment analysis , and 1 of those shouldn't be ignored...

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.