Spark New Zealand Limited's (NZSE:SPK) market cap dropped NZ$345m last week; individual investors who hold 56% were hit as were institutions
Key Insights
Significant control over Spark New Zealand by individual investors implies that the general public has more power to influence management and governance-related decisions
The top 25 shareholders own 39% of the company
A look at the shareholders of Spark New Zealand Limited (NZSE:SPK) can tell us which group is most powerful. The group holding the most number of shares in the company, around 56% to be precise, is individual investors. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
Following a 5.8% decrease in the stock price last week, individual investors suffered the most losses, but institutions who own 44% stock also took a hit.
In the chart below, we zoom in on the different ownership groups of Spark New Zealand.
Check out our latest analysis for Spark New Zealand
What Does The Institutional Ownership Tell Us About Spark New Zealand?
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.
Spark New Zealand 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 Spark New Zealand's historic earnings and revenue below, but keep in mind there's always more to the story.
Spark New Zealand is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is BlackRock, Inc. with 10% of shares outstanding. JPMorgan Chase & Co, Private Banking and Investment Banking Investments is the second largest shareholder owning 8.4% of common stock, and The Vanguard Group, Inc. holds about 4.2% of the company stock.
On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.
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 Spark New Zealand
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
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 data suggests that insiders own under 1% of Spark New Zealand 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 NZ$4.5m 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
The general public -- including retail investors -- own 56% of Spark New Zealand. 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.
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. Be aware that Spark New Zealand is showing 3 warning signs in our investment analysis , and 1 of those is a bit unpleasant...
If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.
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.