Private equity firms among Five-Star Business Finance Limited's (NSE:FIVESTAR) largest stockholders and were hit after last week's 4.8% price drop

Key Insights

• The considerable ownership by private equity firms in Five-Star Business Finance indicates that they collectively have a greater say in management and business strategy
• 53% of the business is held by the top 3 shareholders
• Insiders own 20% of Five-Star Business Finance

A look at the shareholders of Five-Star Business Finance Limited (NSE:FIVESTAR) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are private equity firms with 49% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While insiders, who own 20% shares weren’t spared from last week’s ₹7.6b market cap drop, private equity firms as a group suffered the maximum losses

Let's delve deeper into each type of owner of Five-Star Business Finance, beginning with the chart below.

View our latest analysis for Five-Star Business Finance

What Does The Institutional Ownership Tell Us About Five-Star Business Finance?

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 have a fair amount of stake in Five-Star Business Finance. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Five-Star Business Finance's 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 Five-Star Business Finance. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Five-Star Business Finance's case, its Top Key Executive, Lakshmipathy Deenadayalan, is the largest shareholder, holding 19% of shares outstanding. In comparison, the second and third largest shareholders hold about 17% and 17% of the stock. Additionally, the company's CEO Rangarajan Krishnan directly holds 0.8% of the total shares outstanding.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Five-Star Business Finance

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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 insiders maintain a significant holding in Five-Star Business Finance Limited. It is very interesting to see that insiders have a meaningful ₹30b stake in this ₹153b business. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 13% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Five-Star Business Finance. 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 Equity Ownership

With a stake of 49%, private equity firms could influence the Five-Star Business Finance board. 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

Our data indicates that Private Companies hold 9.9%, of the company's shares. 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. For example, we've discovered 1 warning sign for Five-Star Business Finance that you should be aware of before investing here.

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.