Retail investors who hold 34% of Edelweiss Financial Services Limited (NSE:EDELWEISS) gained 5.5%, insiders profited as well

Key Insights

• The considerable ownership by retail investors in Edelweiss Financial Services indicates that they collectively have a greater say in management and business strategy
• 51% of the business is held by the top 10 shareholders
• Insiders own 31% of Edelweiss Financial Services

To get a sense of who is truly in control of Edelweiss Financial Services Limited (NSE:EDELWEISS), it is important to understand the ownership structure of the business. We can see that retail investors own the lion's share in the company with 34% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While retail investors were the group that benefitted the most from last week’s ₹4.7b market cap gain, insiders too had a 31% share in those profits.

In the chart below, we zoom in on the different ownership groups of Edelweiss Financial Services.

Check out our latest analysis for Edelweiss Financial Services

What Does The Institutional Ownership Tell Us About Edelweiss Financial 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.

We can see that Edelweiss Financial Services does have institutional investors; and they hold a good portion of the company's stock. 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 Edelweiss Financial Services' historic earnings and revenue below, but keep in mind there's always more to the story.

Edelweiss Financial Services is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is the CEO Rashesh Shah with 15% of shares outstanding. Venkatchalam Ramaswamy is the second largest shareholder owning 7.5% of common stock, and CITIC Securities Company Limited, Asset Management Arm holds about 6.4% of the company stock. Interestingly, the second-largest shareholder, Venkatchalam Ramaswamy is also Top Key Executive, again, pointing towards strong insider ownership amongst the company's top shareholders.

We also observed that the top 10 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Edelweiss Financial Services

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. 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 most recent data indicates that insiders own a reasonable proportion of Edelweiss Financial Services Limited. Insiders own ₹27b worth of shares in the ₹90b company. That's quite meaningful. 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 34% stake in the company, and hence can't easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Company Ownership

Our data indicates that Private Companies hold 7.3%, of the company's shares. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Edelweiss Financial Services better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Edelweiss Financial Services (at least 1 which is a bit unpleasant) , and understanding them should be part of your investment process.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.