Following recent decline, Magellanic Cloud Limited's (NSE:MCLOUD) top shareholder CEO Joseph Sudheer Thumma sees holdings value drop by 9.8%

Key Insights

• Significant insider control over Magellanic Cloud implies vested interests in company growth
• The top 2 shareholders own 58% of the company
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

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Every investor in Magellanic Cloud Limited (NSE:MCLOUD) should be aware of the most powerful shareholder groups. We can see that individual insiders own the lion's share in the company with 78% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As market cap fell to ₹43b last week, insiders would have faced the highest losses than any other shareholder groups of the company.

Let's delve deeper into each type of owner of Magellanic Cloud, beginning with the chart below.

View our latest analysis for Magellanic Cloud

What Does The Lack Of Institutional Ownership Tell Us About Magellanic Cloud?

Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.

There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. On the other hand, it's always possible that professional investors are avoiding a company because they don't think it's the best place for their money. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of Magellanic Cloud, for yourself, below.

Hedge funds don't have many shares in Magellanic Cloud. Looking at our data, we can see that the largest shareholder is the CEO Joseph Sudheer Thumma with 40% of shares outstanding. With 19% and 4.4% of the shares outstanding respectively, Jagan Mohan Thumma and Venkatesan Ramasamy are the second and third largest shareholders. Interestingly, the second-largest shareholder, Jagan Mohan Thumma 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 58% stake.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Magellanic Cloud

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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our information suggests that insiders own more than half of Magellanic Cloud Limited. This gives them effective control of the company. Given it has a market cap of ₹43b, that means they have ₹34b worth of shares. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 22% stake in Magellanic Cloud. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

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. Case in point: We've spotted 1 warning sign for Magellanic Cloud you should be aware of.

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.

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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.