Aeroflex Industries Limited's (NSE:AEROFLEX) last week's 12% decline must have disappointed public companies who have a significant stake

Key Insights

• Significant control over Aeroflex Industries by public companies implies that the general public has more power to influence management and governance-related decisions
• 67% of the company is held by a single shareholder (Sat Industries Limited)
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

If you want to know who really controls Aeroflex Industries Limited (NSE:AEROFLEX), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 67% to be precise, is public companies. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As market cap fell to ₹22b last week, public companies would have faced the highest losses than any other shareholder groups of the company.

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

See our latest analysis for Aeroflex Industries

What Does The Institutional Ownership Tell Us About Aeroflex Industries?

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 Aeroflex Industries 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. 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 Aeroflex Industries, (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 Aeroflex Industries. The company's largest shareholder is Sat Industries Limited, with ownership of 67%. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. With 2.3% and 2.2% of the shares outstanding respectively, Nippon Life India Asset Management Limited and Invesco Ltd. are the second and third largest shareholders.

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 Aeroflex Industries

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

Our most recent data indicates that insiders own some shares in Aeroflex Industries Limited. In their own names, insiders own ₹632m worth of stock in the ₹22b company. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 21% stake in Aeroflex Industries. 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.

Public Company Ownership

Public companies currently own 67% of Aeroflex Industries stock. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Aeroflex Industries better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Aeroflex Industries you should be aware of.

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.