-
The considerable ownership by individual investors in NEXTDC indicates that they collectively have a greater say in management and business strategy
-
43% of the business is held by the top 25 shareholders
-
Insiders have sold recently
Every investor in NEXTDC Limited (ASX:NXT) should be aware of the most powerful shareholder groups. We can see that individual investors own the lion’s share in the company with 55% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
And institutions on the other hand have a 45% ownership in the company. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time.
In the chart below, we zoom in on the different ownership groups of NEXTDC.
Check out our latest analysis for NEXTDC
Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.
NEXTDC already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can’t rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 NEXTDC’s earnings history below. Of course, the future is what really matters.
Hedge funds don’t have many shares in NEXTDC. Looking at our data, we can see that the largest shareholder is State Street Global Advisors, Inc. with 6.3% of shares outstanding. Australian Super Pty Ltd is the second largest shareholder owning 5.7% of common stock, and BlackRock, Inc. holds about 5.2% of the company stock.
A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.
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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.
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 data suggests that insiders own under 1% of NEXTDC Limited in their own names. It’s a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own AU$52m worth of shares. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.
The general public, who are usually individual investors, hold a substantial 55% stake in NEXTDC, suggesting it is a fairly popular stock. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.
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. Case in point: We’ve spotted 2 warning signs for NEXTDC 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
#NEXTDC #Limiteds #ASXNXT #top #owners #individual #investors #stake #held #institutions
Leave a Reply