Kernex Microsystems (India) Limited's (NSE:KERNEX) 12% gain last week benefited both retail investors who own 47% as well as insiders

Key Insights

• Significant control over Kernex Microsystems (India) by retail investors implies that the general public has more power to influence management and governance-related decisions
• The top 16 shareholders own 50% of the company
• Insiders have been buying lately

If you want to know who really controls Kernex Microsystems (India) Limited (NSE:KERNEX), then you'll have to look at the makeup of its share registry. With 47% stake, retail investors possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While retail investors were the group that benefitted the most from last week’s ₹1.4b market cap gain, insiders too had a 45% share in those profits.

In the chart below, we zoom in on the different ownership groups of Kernex Microsystems (India).

View our latest analysis for Kernex Microsystems (India)

What Does The Lack Of Institutional Ownership Tell Us About Kernex Microsystems (India)?

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 are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Kernex Microsystems (India)'s earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.

Kernex Microsystems (India) is not owned by hedge funds. The company's largest shareholder is Anji Manthena, with ownership of 15%. For context, the second largest shareholder holds about 4.3% of the shares outstanding, followed by an ownership of 3.8% by the third-largest shareholder. Sree Manthena, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

A closer look at our ownership figures suggests that the top 16 shareholders have a combined ownership of 50% implying that no single shareholder has a majority.

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. 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 Kernex Microsystems (India)

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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 a reasonable proportion of Kernex Microsystems (India) Limited. Insiders own ₹5.9b worth of shares in the ₹13b company. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. 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 47% stake in Kernex Microsystems (India). 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.

Private Company Ownership

It seems that Private Companies own 7.8%, of the Kernex Microsystems (India) stock. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private 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 4 warning signs for Kernex Microsystems (India) (2 are significant) that you should be aware of.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.