Institutions along with individual investors who hold considerable shares inNetLink NBN Trust (SGX:CJLU) come under pressure; lose 3.9% of holdings value

To get a sense of who is truly in control of NetLink NBN Trust (SGX:CJLU), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 49% to be precise, is individual investors. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 3.9% decrease in the stock price last week, individual investors suffered the most losses, but institutions who own 26% stock also took a hit.

In the chart below, we zoom in on the different ownership groups of NetLink NBN Trust.

See our latest analysis for NetLink NBN Trust

What Does The Institutional Ownership Tell Us About NetLink NBN Trust?

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 NetLink NBN Trust. 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 NetLink NBN Trust'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 NetLink NBN Trust. Looking at our data, we can see that the largest shareholder is Singapore Telecommunications Limited with 25% of shares outstanding. In comparison, the second and third largest shareholders hold about 7.9% and 5.0% of the stock.

A closer look at our ownership figures suggests that the top 23 shareholders have a combined ownership of 50% implying that no single shareholder has a majority.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of NetLink NBN Trust

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 NetLink NBN Trust in their own names. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own S$11m worth of shares. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

With a 49% ownership, the general public, mostly comprising of individual investors, have some degree of sway over NetLink NBN Trust. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Public Company Ownership

We can see that public companies hold 25% of the NetLink NBN Trust shares on issue. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should be aware of the 2 warning signs we've spotted with NetLink NBN Trust .

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.