R K Swamy Limited (NSE:RKSWAMY) Top Key Executive Srinivasan Swamy, the company's largest shareholder sees 15%reduction in holdings value

Key Insights

• Significant insider control over R K Swamy implies vested interests in company growth
• A total of 2 investors have a majority stake in the company with 70% ownership
• Institutions own 14% of R K Swamy

A look at the shareholders of R K Swamy Limited (NSE:RKSWAMY) can tell us which group is most powerful. The group holding the most number of shares in the company, around 70% to be precise, is individual insiders. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And following last week's 15% decline in share price, insiders suffered the most losses.

In the chart below, we zoom in on the different ownership groups of R K Swamy.

See our latest analysis for R K Swamy

What Does The Institutional Ownership Tell Us About R K Swamy?

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 R K Swamy. 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 R K Swamy's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in R K Swamy. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In R K Swamy's case, its Top Key Executive, Srinivasan Swamy, is the largest shareholder, holding 37% of shares outstanding. With 33% and 4.2% of the shares outstanding respectively, Narasimhan Krishnaswamy and Nippon Life India Asset Management Limited are the second and third largest shareholders. Interestingly, the second-largest shareholder, Narasimhan Krishnaswamy is also Co-Chief Executive Officer, again, pointing towards strong insider ownership amongst the company's top shareholders.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 70% stake.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of R K Swamy

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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 information suggests that insiders own more than half of R K Swamy Limited. This gives them effective control of the company. That means they own ₹7.4b worth of shares in the ₹11b company. That's quite meaningful. Most would argue this is a positive, showing strong alignment with shareholders. 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 16% stake in R K Swamy. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

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.

Many find it useful to take an in depth look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this 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.

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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.