Institutions along with individual investors who hold considerable shares inADvTECH Limited (JSE:ADH) come under pressure; lose 7.5% of holdings value

Key Insights

• The considerable ownership by individual investors in ADvTECH indicates that they collectively have a greater say in management and business strategy
• A total of 25 investors have a majority stake in the company with 49% ownership
• Insiders have been selling lately

Every investor in ADvTECH Limited (JSE:ADH) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 50% to be precise, is individual investors. Put another way, the group faces the maximum upside potential (or downside risk).

While institutions who own 25% came under pressure after market cap dropped to R14b last week,individual investors took the most losses.

Let's take a closer look to see what the different types of shareholders can tell us about ADvTECH.

See our latest analysis for ADvTECH

What Does The Institutional Ownership Tell Us About ADvTECH?

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 ADvTECH. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at ADvTECH's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in ADvTECH. Public Investment Corporation Limited is currently the company's largest shareholder with 17% of shares outstanding. With 15% and 5.6% of the shares outstanding respectively, Coronation Fund Managers Limited and Value Capital Partners are the second and third largest shareholders.

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.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of ADvTECH

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Shareholders would probably be interested to learn that insiders own shares in ADvTECH Limited. It has a market capitalization of just R14b, and insiders have R328m worth of shares, in their own names. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public -- including retail investors -- own 50% of ADvTECH. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Private Equity Ownership

Private equity firms hold a 5.6% stake in ADvTECH. This suggests they can be influential in key policy decisions. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important.

I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.