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Could The FRP Advisory Group plc (LON:FRP) Ownership Structure Tell Us Something Useful?

Simply Wall St

If you want to know who really controls FRP Advisory Group plc (LON:FRP), then you'll have to look at the makeup of its share registry. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, 'Don’t tell me what you think, tell me what you have in your portfolio.

With a market capitalization of UK£289m, FRP Advisory Group is a small cap stock, so it might not be well known by many institutional investors. In the chart below, we can see that institutions own shares in the company. We can zoom in on the different ownership groups, to learn more about FRP Advisory Group.

See our latest analysis for FRP Advisory Group

AIM:FRP Ownership Breakdown July 3rd 2020

What Does The Institutional Ownership Tell Us About FRP Advisory Group?

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.

FRP Advisory Group 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 FRP Advisory Group's historic earnings and revenue, below, but keep in mind there's always more to the story.

AIM:FRP Earnings and Revenue Growth July 3rd 2020

We note that hedge funds don't have a meaningful investment in FRP Advisory Group. The company's CEO Geoffrey Rowley is the largest shareholder with 8.0% of shares outstanding. With 7.6% and 7.4% of the shares outstanding respectively, Miton Asset Management Limited and Liontrust Investment Partners LLP are the second and third largest shareholders.

After doing some more digging, we found that the top 11 have the combined ownership of 51% in the company, suggesting that no one share holder has significant control over 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. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of FRP Advisory Group

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.

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 information suggests that insiders maintain a significant holding in FRP Advisory Group plc. It has a market capitalization of just UK£289m, and insiders have UK£98m 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, with a 48% stake in the company, will not easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Next Steps:

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

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.

This article by Simply Wall St is general in nature. 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.

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