Institutions own 43% of Spark New Zealand Limited (NZSE:SPK) shares but retail investors control 57% of the company

Key Insights

• The considerable ownership by retail investors in Spark New Zealand indicates that they collectively have a greater say in management and business strategy
• The top 25 shareholders own 38% of the company
• Insiders have bought recently

Every investor in Spark New Zealand Limited (NZSE:SPK) should be aware of the most powerful shareholder groups. We can see that retail investors own the lion's share in the company with 57% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Institutions, on the other hand, account for 43% of the company's stockholders. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies.

Let's delve deeper into each type of owner of Spark New Zealand, beginning with the chart below.

View our latest analysis for Spark New Zealand

What Does The Institutional Ownership Tell Us About Spark New Zealand?

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 Spark New Zealand. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Spark New Zealand's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Spark New Zealand. The company's largest shareholder is JPMorgan Chase & Co, Private Banking and Investment Banking Investments, with ownership of 8.2%. Meanwhile, the second and third largest shareholders, hold 5.9% and 4.1%, of the shares outstanding, respectively.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Spark New Zealand

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

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 less than 1% of Spark New Zealand Limited. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own NZ$4.6m worth of shares. Arguably, recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

The general public -- including retail investors -- own 57% of Spark New Zealand. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Spark New Zealand better, we need to consider many other factors. For example, we've discovered 3 warning signs for Spark New Zealand (1 makes us a bit uncomfortable!) that you should be aware of before investing here.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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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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.