Blue Label Telecoms Limited's (JSE:BLU) high institutional ownership speaks for itself as stock continues to impress, up 18% over last week

Key Insights

• Significantly high institutional ownership implies Blue Label Telecoms' stock price is sensitive to their trading actions
• The top 5 shareholders own 52% of the company
• Insider ownership in Blue Label Telecoms is 34%

A look at the shareholders of Blue Label Telecoms Limited (JSE:BLU) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are institutions with 39% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And as as result, institutional investors reaped the most rewards after the company's stock price gained 18% last week. The gains from last week would have further boosted the one-year return to shareholders which currently stand at 45%.

In the chart below, we zoom in on the different ownership groups of Blue Label Telecoms.

See our latest analysis for Blue Label Telecoms

What Does The Institutional Ownership Tell Us About Blue Label Telecoms?

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.

Blue Label Telecoms already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Blue Label Telecoms' historic earnings and revenue below, but keep in mind there's always more to the story.

Blue Label Telecoms is not owned by hedge funds. The company's largest shareholder is Allan Gray Proprietary Ltd., with ownership of 14%. With 13% and 9.7% of the shares outstanding respectively, Kevin Ellerine and Brett Levy are the second and third largest shareholders. Brett Levy, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors. In addition, we found that Mark Levy, the CEO has 9.3% of the shares allocated to their name.

On looking further, we found that 52% of the shares are owned by the top 5 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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

Insider Ownership Of Blue Label Telecoms

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. 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.

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.

Our information suggests that insiders maintain a significant holding in Blue Label Telecoms Limited. It has a market capitalization of just R4.5b, and insiders have R1.5b 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, who are usually individual investors, hold a 19% stake in Blue Label Telecoms. 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.

Private Company Ownership

It seems that Private Companies own 8.0%, of the Blue Label Telecoms stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Blue Label Telecoms better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Blue Label Telecoms you should know about.

Of course this may not be the best stock to buy. So take a peek at this free 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.