Despite recent sales, Karooooo Ltd. (NASDAQ:KARO) insiders own 69% shares but recent downturn may have set them back

Key Insights

• Significant insider control over Karooooo implies vested interests in company growth
• Isaias Jose Calisto owns 69% of the company
• Recent sales by insiders

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Every investor in Karooooo Ltd. (NASDAQ:KARO) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 69% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Despite selling some shares recently, insiders control a good portion of the company's stock. As a result, they were also the group to endure the biggest losses as the stock fell by 4.2%.

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

See our latest analysis for Karooooo

What Does The Institutional Ownership Tell Us About Karooooo?

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.

Less than 5% of Karooooo is held by institutional investors. This suggests that some funds have the company in their sights, but many have not yet bought shares in it. So if the company itself can improve over time, we may well see more institutional buyers in the future. 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.

Our data indicates that hedge funds own 7.1% of Karooooo. That's interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. With a 69% stake, CEO Isaias Jose Calisto is the largest shareholder. This implies that they possess majority interests and have significant control over the company. Investors usually consider it a good sign when the company leadership has such a significant stake, as this is widely perceived to increase the chance that the management will act in the best interests of the company. Meanwhile, the second and third largest shareholders, hold 7.1% and 0.7%, of the shares outstanding, respectively.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Karooooo

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.

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.

It seems that insiders own more than half the Karooooo Ltd. stock. This gives them a lot of power. That means insiders have a very meaningful US$1.0b stake in this US$1.5b business. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if they have been selling down their stake.

General Public Ownership

With a 20% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Karooooo. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

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. Case in point: We've spotted 2 warning signs for Karooooo you should be aware of.

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.