Painful week for private companies invested in MedPlus Health Services Limited (NSE:MEDPLUS) after 5.2% drop, institutions also suffered losses

Key Insights

• The considerable ownership by private companies in MedPlus Health Services indicates that they collectively have a greater say in management and business strategy
• The top 4 shareholders own 52% of the company
• Insider ownership in MedPlus Health Services is 14%

Every investor in MedPlus Health Services Limited (NSE:MEDPLUS) should be aware of the most powerful shareholder groups. We can see that private companies own the lion's share in the company with 28% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While institutions who own 23% came under pressure after market cap dropped to ₹91b last week,private companies took the most losses.

Let's delve deeper into each type of owner of MedPlus Health Services, beginning with the chart below.

Check out our latest analysis for MedPlus Health Services

What Does The Institutional Ownership Tell Us About MedPlus Health Services?

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 MedPlus Health Services. 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. 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 MedPlus Health Services, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in MedPlus Health Services. Looking at our data, we can see that the largest shareholder is Lone Furrow Investments Private Limited with 14% of shares outstanding. Agilemed Investments Private Limited is the second largest shareholder owning 13% of common stock, and Madhukar Gangadi holds about 13% of the company stock. Madhukar Gangadi, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board.

On looking further, we found that 52% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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 are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of MedPlus Health Services

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.

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.

It seems insiders own a significant proportion of MedPlus Health Services Limited. It has a market capitalization of just ₹91b, and insiders have ₹13b worth of shares in their own names. That's quite significant. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

The general public, who are usually individual investors, hold a 16% stake in MedPlus Health Services. 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.

Private Equity Ownership

With an ownership of 20%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Private Company Ownership

We can see that Private Companies own 28%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with MedPlus Health Services , and understanding them should be part of your investment process.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.