A ₹13b drop in the market cap of Hatsun Agro Product Limited (NSE:HATSUN) is not what insiders like to see after purchasing shares recently

Key Insights

• Significant insider control over Hatsun Agro Product implies vested interests in company growth
• 55% of the company is held by a single shareholder (R. Chandramogan)
• Insiders have been buying lately

Every investor in Hatsun Agro Product Limited (NSE:HATSUN) should be aware of the most powerful shareholder groups. With 77% stake, individual insiders possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Notably, insiders have bought shares recently. So the news of stock price falling by 5.2% is not something they might have been expecting soon after purchasing shares.

Let's take a closer look to see what the different types of shareholders can tell us about Hatsun Agro Product.

See our latest analysis for Hatsun Agro Product

What Does The Institutional Ownership Tell Us About Hatsun Agro Product?

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 Hatsun Agro Product does have institutional investors; and they hold a good portion of the company's stock. 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 Hatsun Agro Product'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 Hatsun Agro Product. Looking at our data, we can see that the largest shareholder is R. Chandramogan with 55% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. With 11% and 7.1% of the shares outstanding respectively, C. Sathyan and SBI Funds Management Limited are the second and third largest shareholders. C. Sathyan, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

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 is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Hatsun Agro Product

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. 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.

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 own more than half of Hatsun Agro Product Limited. This gives them effective control of the company. That means insiders have a very meaningful ₹175b stake in this ₹229b business. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if they have been selling down their stake.

General Public Ownership

The general public-- including retail investors -- own 10% stake in the company, and hence can't easily be ignored. 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 Hatsun Agro Product is showing 3 warning signs in our investment analysis , and 2 of those don't sit too well with us...

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com