The big shareholder groups in Magic Software Enterprises Ltd. (NASDAQ:MGIC) have power over the company. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies. Companies that used to be publicly owned tend to have lower insider ownership.
Magic Software Enterprises isn't enormous, but it's not particularly small either. It has a market capitalization of US$837m, which means it would generally expect to see some institutions on the share registry. Our analysis of the ownership of the company, below, shows that institutional investors have bought into the company. Let's take a closer look to see what the different types of shareholders can tell us about Magic Software Enterprises.
What Does The Institutional Ownership Tell Us About Magic Software Enterprises?
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.
Magic Software Enterprises already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Magic Software Enterprises, (below). Of course, keep in mind that there are other factors to consider, too.
Hedge funds don't have many shares in Magic Software Enterprises. Our data shows that Formula Systems (1985) Ltd. is the largest shareholder with 46% of shares outstanding. Harel Insurance Investments and Finances Services Ltd, Asset Management Arm is the second largest shareholder owning 5.1% of common stock, and Clal Financial Management Ltd holds about 4.9% of the company stock.
To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.
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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.
Insider Ownership Of Magic Software Enterprises
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.
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 Magic Software Enterprises Ltd. in their own names. It appears that the board holds about US$5.8m worth of stock. This compares to a market capitalization of US$837m. 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 holds a 25% stake in Magic Software Enterprises. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.
Public Company Ownership
It appears to us that public companies own 45% of Magic Software Enterprises. 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.
It's always worth thinking about the different groups who own shares in a company. But to understand Magic Software Enterprises better, we need to consider many other factors. For instance, we've identified 2 warning signs for Magic Software Enterprises that 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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