Telkom SA SOC Ltd (JSE:TKG) surges 14%; state or government who own 41% shares profited along with institutions

Key Insights

• Telkom SA SOC's significant state or government ownership suggests that the key decisions are influenced by shareholders from the larger public
• A total of 2 investors have a majority stake in the company with 52% ownership
• Recent sales by insiders

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Every investor in Telkom SA SOC Ltd (JSE:TKG) should be aware of the most powerful shareholder groups. With 41% stake, state or government possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

State or government gained the most after market cap touched R28b last week, while institutions who own 37% also benefitted.

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

View our latest analysis for Telkom SA SOC

What Does The Institutional Ownership Tell Us About Telkom SA SOC?

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.

Telkom SA SOC already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Telkom SA SOC's historic earnings and revenue below, but keep in mind there's always more to the story.

Telkom SA SOC is not owned by hedge funds. South Africa is currently the largest shareholder, with 41% of shares outstanding. For context, the second largest shareholder holds about 10% of the shares outstanding, followed by an ownership of 4.7% by the third-largest shareholder.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Telkom SA SOC

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 most recent data indicates that insiders own less than 1% of Telkom SA SOC Ltd. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own R17m worth of shares. Arguably, recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

With a 22% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Telkom SA SOC. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Telkom SA SOC you should know about.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

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.