Prism Johnson Limited's (NSE:PRSMJOHNSN) 4.3% loss last week hit both individual investors who own 44% as well as institutions

Key Insights

• The considerable ownership by private companies in Prism Johnson indicates that they collectively have a greater say in management and business strategy
• The top 2 shareholders own 55% of the company
• 14% of Prism Johnson is held by insiders

If you want to know who really controls Prism Johnson Limited (NSE:PRSMJOHNSN), then you'll have to look at the makeup of its share registry. We can see that private companies own the lion's share in the company with 44% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While institutions, who own 27% shares weren’t spared from last week’s ₹4.3b market cap drop, private companies as a group suffered the maximum losses

In the chart below, we zoom in on the different ownership groups of Prism Johnson.

See our latest analysis for Prism Johnson

What Does The Institutional Ownership Tell Us About Prism Johnson?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

Prism Johnson already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Prism Johnson's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Prism Johnson. Our data shows that Hathway Investments Pvt. Ltd. is the largest shareholder with 38% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 17% and 12%, of the shares outstanding, respectively. Rajan Raheja, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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 Prism Johnson

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

It seems insiders own a significant proportion of Prism Johnson Limited. It has a market capitalization of just ₹95b, and insiders have ₹13b worth of shares in their own names. That's quite significant. 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, who are usually individual investors, hold a 15% stake in Prism Johnson. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

We can see that Private Companies own 44%, of the shares on issue. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we've identified 3 warning signs for Prism Johnson (1 is concerning) that 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.