While institutions own 31% of Mainfreight Limited (NZSE:MFT), individual investors are its largest shareholders with 51% ownership

Key Insights

• The considerable ownership by individual investors in Mainfreight indicates that they collectively have a greater say in management and business strategy
• 47% of the business is held by the top 25 shareholders
• Insiders have been selling lately

If you want to know who really controls Mainfreight Limited (NZSE:MFT), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are individual investors with 51% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Institutions, on the other hand, account for 31% 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 Mainfreight, beginning with the chart below.

View our latest analysis for Mainfreight

What Does The Institutional Ownership Tell Us About Mainfreight?

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.

Mainfreight already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Mainfreight's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Mainfreight. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Mainfreight's case, its Top Key Executive, Bruce Plested, is the largest shareholder, holding 15% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 4.7% and 3.5%, of the shares outstanding, respectively. In addition, we found that Donald Braid, the CEO has 2.9% of the shares allocated to their name.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Mainfreight

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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our information suggests that insiders maintain a significant holding in Mainfreight Limited. It has a market capitalization of just NZ$6.8b, and insiders have NZ$1.2b worth of shares in their own names. That's quite significant. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

The general public, who are usually individual investors, hold a substantial 51% stake in Mainfreight, suggesting it is a fairly popular stock. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Mainfreight better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Mainfreight (of which 1 doesn't sit too well with us!) you should know about.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.