With 60% ownership in Imdex Limited (ASX:IMD), institutional investors have a lot riding on the business

Simply Wall St · 10/17 21:40

Key Insights

  • Institutions' substantial holdings in Imdex implies that they have significant influence over the company's share price
  • A total of 11 investors have a majority stake in the company with 52% ownership
  • Recent purchases by insiders

A look at the shareholders of Imdex Limited (ASX:IMD) can tell us which group is most powerful. With 60% stake, institutions 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.

And as as result, institutional investors reaped the most rewards after the company's stock price gained 9.1% last week. One-year return to shareholders is currently 77% and last week’s gain was the icing on the cake.

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

See our latest analysis for Imdex

ownership-breakdown
ASX:IMD Ownership Breakdown October 17th 2024

What Does The Institutional Ownership Tell Us About Imdex?

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.

As you can see, institutional investors have a fair amount of stake in Imdex. 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. 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 Imdex's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
ASX:IMD Earnings and Revenue Growth October 17th 2024

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Imdex is not owned by hedge funds. L1 Capital Pty. Limited is currently the company's largest shareholder with 13% of shares outstanding. In comparison, the second and third largest shareholders hold about 6.9% and 5.0% of the stock.

Looking at the shareholder registry, we can see that 52% of the ownership is controlled by the top 11 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Imdex

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.

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.

Shareholders would probably be interested to learn that insiders own shares in Imdex Limited. It has a market capitalization of just AU$1.2b, and insiders have AU$23m 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 38% 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.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too.

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.

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.