Harish Gupta Roto Pumps Limited's (NSE:ROTO) CEO is the most bullish insider, and their stock value gained 17%last week

Key Insights

• Roto Pumps' significant insider ownership suggests inherent interests in company's expansion
• A total of 4 investors have a majority stake in the company with 57% ownership
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

Every investor in Roto Pumps Limited (NSE:ROTO) should be aware of the most powerful shareholder groups. We can see that individual insiders own the lion's share in the company with 71% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Clearly, insiders benefitted the most after the company's market cap rose by ₹2.0b last week.

In the chart below, we zoom in on the different ownership groups of Roto Pumps.

See our latest analysis for Roto Pumps

What Does The Lack Of Institutional Ownership Tell Us About Roto Pumps?

Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.

There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. Alternatively, there might be something about the company that has kept institutional investors away. Roto Pumps' earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.

Roto Pumps is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is the CEO Harish Gupta with 17% of shares outstanding. For context, the second largest shareholder holds about 16% of the shares outstanding, followed by an ownership of 16% by the third-largest shareholder. Interestingly, the third-largest shareholder, Anurag Gupta is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.

Our research also brought to light the fact that roughly 57% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Roto Pumps

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.

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 most recent data indicates that insiders own the majority of Roto Pumps Limited. This means they can collectively make decisions for the company. So they have a ₹10b stake in this ₹14b 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, who are usually individual investors, hold a 28% stake in Roto Pumps. 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:

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 Roto Pumps is showing 1 warning sign in our investment analysis , you should know about...

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.