If you want to know who really controls Videocon Industries Limited (NSE:VIDEOIND), then you'll have to look at the makeup of its share registry. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. Companies that used to be publicly owned tend to have lower insider ownership.
Videocon Industries is a smaller company with a market capitalization of ₹428m, so it may still be flying under the radar of many institutional investors. In the chart below, we can see that institutions own shares in the company. Let's take a closer look to see what the different types of shareholder can tell us about Videocon Industries.
View our latest analysis for Videocon Industries
What Does The Institutional Ownership Tell Us About Videocon Industries?
Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.
As you can see, institutional investors own 5.2% of Videocon Industries. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Videocon Industries's historic earnings and revenue, below, but keep in mind there's always more to the story.
Videocon Industries is not owned by hedge funds. Videocon Realty & Infrastructure Ltd is currently the company's largest shareholder with 15% of shares outstanding. The second and third largest shareholders are Life Insurance Corporation of India, Asset Management Arm and Dome-Bell Electronics India Pvt Ltd, each holding around 4.6% of the shares outstanding.
On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.
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 Videocon Industries
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 information suggests that Videocon Industries Limited insiders own under 1% of the company. However, it's possible that insiders might have an indirect interest through a more complex structure. It seems the board members have no more than ₹722k worth of shares in the ₹428m company. I generally like to see a board more invested. However it might be worth checking if those insiders have been buying.
General Public Ownership
The general public, mostly retail investors, hold a substantial 54% stake in VIDEOIND, suggesting it is a fairly popular stock. This size of ownership gives retail investors collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.
Private Company Ownership
Our data indicates that Private Companies hold 40%, of the company's shares. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Videocon Industries better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Videocon Industries (at least 2 which are potentially serious) , 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.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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