The big shareholder groups in Freightways Limited (NZSE:FRE) have power over the company. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. Companies that have been privatized tend to have low insider ownership.
With a market capitalization of NZ$1.1b, Freightways 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 own shares in the company. Let’s take a closer look to see what the different types of shareholder can tell us about FRE.
What Does The Institutional Ownership Tell Us About Freightways?
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.
We can see that Freightways does have institutional investors; and they hold 40% of the stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Freightways’s historic earnings and revenue, below, but keep in mind there’s always more to the story.
Freightways is not owned by hedge funds. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Freightways
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. 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 data suggests that insiders own under 1% of Freightways Limited in their own names. But they may have an indirect interest through a corporate structure that we haven’t picked up on. It seems the board members have no more than NZ$5.5m worth of shares in the NZ$1.1b company. I generally like to see a board more invested. However it might be worth checking if those insiders have been buying.
General Public Ownership
The general public — mostly retail investors — own 58% of Freightways . This level of ownership gives retail investors the power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.
While it is well worth considering the different groups that own a company, there are other factors that are even more important.
I always like to check for a history of revenue growth. You can too, by accessing this free chart of historic revenue and earnings in this detailed graph.
If you are like me, you may want to think about whether this company will grow of 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.
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 firstname.lastname@example.org.