Do Insiders Own Lots Of Shares In Creative Peripherals and Distribution Limited (NSE:CREATIVE)?

If you want to know who really controls Creative Peripherals and Distribution Limited (NSE:CREATIVE), then you’ll have to look at the makeup of its share registry. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. I quite like to see at least a little bit of insider ownership. As Charlie Munger said ‘Show me the incentive and I will show you the outcome.’

With a market capitalization of ₹667m, Creative Peripherals and Distribution is a small cap stock, so it might not be well known by many institutional investors. In the chart below below, we can see that institutions are not really that prevalent on the share registry. We can zoom in on the different ownership groups, to learn more about CREATIVE.

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NSEI:CREATIVE Ownership Summary January 29th 19
NSEI:CREATIVE Ownership Summary January 29th 19

What Does The Institutional Ownership Tell Us About Creative Peripherals and Distribution?

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.

Since institutions own under 5% of Creative Peripherals and Distribution, many may not have spent much time considering the stock. But it’s clear that some have; and they liked it enough to buy in. So if the company itself can improve over time, we may well see more institutional buyers in the future. We sometimes see a rising share price when a few big institutions want to buy a certain stock at the same time. The history of earnings and revenue, which you can see below, could be helpful in considering if more institutional investors will want the stock. Of course, there are plenty of other factors to consider, too.

NSEI:CREATIVE Income Statement Export January 29th 19
NSEI:CREATIVE Income Statement Export January 29th 19

We note that hedge funds don’t have a meaningful investment in Creative Peripherals and Distribution. As far I can tell there isn’t analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Creative Peripherals and Distribution

The definition of company insiders can be subjective, and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.

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.

It seems that insiders own more than half the Creative Peripherals and Distribution Limited stock. This gives them a lot of power. So they have a ₹522m stake in this ₹667m business. 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

With a 19% ownership, the general public have some degree of sway over CREATIVE. 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important.

I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.