My Food Bag Group Limited's (NZSE:MFB) latest 11% decline adds to one-year losses, institutional investors may consider drastic measures

By
Simply Wall St
Published
May 10, 2022
NZSE:MFB
Source: Shutterstock

A look at the shareholders of My Food Bag Group Limited (NZSE:MFB) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are institutions with 47% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And institutional investors saw their holdings value drop by 11% last week. This set of investors may especially be concerned about the current loss, which adds to a one-year loss of 43% for shareholders. Institutions or "liquidity providers" control large sums of money and therefore, these types of investors usually have a lot of influence over stock price movements. As a result, if the downtrend continues, institutions may face pressures to sell My Food Bag Group, which might have negative implications on individual investors.

Let's delve deeper into each type of owner of My Food Bag Group, beginning with the chart below.

Check out our latest analysis for My Food Bag Group

ownership-breakdown
NZSE:MFB Ownership Breakdown May 10th 2022

What Does The Institutional Ownership Tell Us About My Food Bag Group?

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.

As you can see, institutional investors have a fair amount of stake in My Food Bag Group. 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 My Food Bag Group's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
NZSE:MFB Earnings and Revenue Growth May 10th 2022

We note that hedge funds don't have a meaningful investment in My Food Bag Group. Looking at our data, we can see that the largest shareholder is Waterman Capital with 16% of shares outstanding. Harbour Asset Management Limited is the second largest shareholder owning 12% of common stock, and Milford Asset Management Limited holds about 8.8% of the company stock.

We also observed that the top 6 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of My Food Bag Group

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Our data suggests that insiders own under 1% of My Food Bag Group Limited in their own names. But they may have an indirect interest through a corporate structure that we haven't picked up on. It has a market capitalization of just NZ$206m, and the board has only NZ$1.8m worth of shares in their own names. Many tend to prefer to see a board with bigger shareholdings. A good next step might be to take a look at this free summary of insider buying and selling.

General Public Ownership

With a 28% ownership, the general public, mostly comprising of individual investors, have some degree of sway over My Food Bag Group. 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.

Private Equity Ownership

Private equity firms hold a 16% stake in My Food Bag Group. This suggests they can be influential in key policy decisions. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Private Company Ownership

We can see that Private Companies own 8.4%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

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. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with My Food Bag Group , and understanding them should be part of your investment process.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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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