To get a sense of who is truly in control of Tamil Nadu Newsprint and Papers Limited (NSE:TNPL), it is important to understand the ownership structure of the business. With 40% stake, state or government possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).
And following last week's 11% decline in share price, state or government suffered the most losses.
Let's take a closer look to see what the different types of shareholders can tell us about Tamil Nadu Newsprint and Papers.
What Does The Institutional Ownership Tell Us About Tamil Nadu Newsprint and Papers?
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 Tamil Nadu Newsprint and Papers 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 Tamil Nadu Newsprint and Papers' historic earnings and revenue below, but keep in mind there's always more to the story.
Tamil Nadu Newsprint and Papers is not owned by hedge funds. Our data shows that Government of Tamil Nadu is the largest shareholder with 35% of shares outstanding. For context, the second largest shareholder holds about 8.2% of the shares outstanding, followed by an ownership of 6.3% by the third-largest shareholder.
On looking further, we found that 55% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.
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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.
Insider Ownership Of Tamil Nadu Newsprint and Papers
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 some shares in Tamil Nadu Newsprint and Papers Limited. In their own names, insiders own ₹558m worth of stock in the ₹13b company. This shows at least some alignment, but we usually like to see larger insider holdings. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public, who are usually individual investors, hold a 28% stake in Tamil Nadu Newsprint and Papers. 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
It seems that Private Companies own 5.0%, of the Tamil Nadu Newsprint and Papers stock. 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.
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Tamil Nadu Newsprint and Papers (at least 3 which make us uncomfortable) , and understanding them should be part of your investment process.
Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.
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.
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.