Do Insiders Own Lots Of Shares In DAVIDsTEA Inc. (NASDAQ:DTEA)?

By
Simply Wall St
Published
November 11, 2021
NasdaqGM:DTEA
Source: Shutterstock

A look at the shareholders of DAVIDsTEA Inc. (NASDAQ:DTEA) can tell us which group is most powerful. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. Warren Buffett said that he likes "a business with enduring competitive advantages that is run by able and owner-oriented people." So it's nice to see some insider ownership, because it may suggest that management is owner-oriented.

DAVIDsTEA is a smaller company with a market capitalization of US$112m, so it may still be flying under the radar of many institutional investors. Taking a look at our data on the ownership groups (below), it seems that institutions are not really that prevalent on the share registry. Let's take a closer look to see what the different types of shareholders can tell us about DAVIDsTEA.

View our latest analysis for DAVIDsTEA

ownership-breakdown
NasdaqGM:DTEA Ownership Breakdown November 12th 2021

What Does The Institutional Ownership Tell Us About DAVIDsTEA?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

Institutions have a very small stake in DAVIDsTEA. That indicates that the company is on the radar of some funds, but it isn't particularly popular with professional investors at the moment. If the business gets stronger from here, we could see a situation where more institutions are keen to buy. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.

earnings-and-revenue-growth
NasdaqGM:DTEA Earnings and Revenue Growth November 12th 2021

DAVIDsTEA is not owned by hedge funds. The company's largest shareholder is Herschel Segal, with ownership of 46%. Meanwhile, the second and third largest shareholders, hold 0.5% and 0.4%, 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.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of DAVIDsTEA

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

It seems insiders own a significant proportion of DAVIDsTEA Inc.. It has a market capitalization of just US$112m, and insiders have US$52m worth of shares in their own names. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public holds a substantial 51% stake in DAVIDsTEA, suggesting it is a fairly popular stock. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

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 risks, for instance. Every company has them, and we've spotted 2 warning signs for DAVIDsTEA you should know about.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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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