With 62% ownership of the shares, CGI Inc. (TSE:GIB.A) is heavily dominated by institutional owners

Simply Wall St · 10/15 16:07

Key Insights

  • Significantly high institutional ownership implies CGI's stock price is sensitive to their trading actions
  • The top 19 shareholders own 51% of the company
  • Recent sales by insiders

Every investor in CGI Inc. (TSE:GIB.A) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 62% to be precise, is institutions. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Given the vast amount of money and research capacities at their disposal, institutional ownership tends to carry a lot of weight, especially with individual investors. Therefore, a good portion of institutional money invested in the company is usually a huge vote of confidence on its future.

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

See our latest analysis for CGI

ownership-breakdown
TSX:GIB.A Ownership Breakdown October 15th 2024

What Does The Institutional Ownership Tell Us About CGI?

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.

We can see that CGI does have institutional investors; and they hold a good portion of the company's stock. 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. 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 CGI, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
TSX:GIB.A Earnings and Revenue Growth October 15th 2024

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. CGI is not owned by hedge funds. Distinction Capital is currently the largest shareholder, with 11% of shares outstanding. Caisse de dépôt et placement du Québec is the second largest shareholder owning 7.1% of common stock, and Mawer Investment Management Ltd. holds about 4.5% of the company stock.

Looking at the shareholder registry, we can see that 51% of the ownership is controlled by the top 19 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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

Insider Ownership Of CGI

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

Our most recent data indicates that insiders own less than 1% of CGI Inc.. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own CA$197m of stock. 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

The general public-- including retail investors -- own 27% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

With a stake of 11%, private equity firms could influence the CGI board. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand CGI better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for CGI you should be aware of.

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.