APM Human Services International Limited's (ASX:APM) market cap dropped AU$216m last week; Private equity firms bore the brunt
editorial-team@simplywallst.com (Simply Wall St)
5 min read
Key Insights
The considerable ownership by private equity firms in APM Human Services International indicates that they collectively have a greater say in management and business strategy
To get a sense of who is truly in control of APM Human Services International Limited (ASX:APM), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 30% to be precise, is private equity firms. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
Following a 13% decrease in the stock price last week, private equity firms suffered the most losses, but insiders who own 27% stock also took a hit.
Let's take a closer look to see what the different types of shareholders can tell us about APM Human Services International.
What Does The Institutional Ownership Tell Us About APM Human Services International?
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.
We can see that APM Human Services International does have institutional investors; and they hold a good portion of the company's stock. 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. 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 APM Human Services International, (below). Of course, keep in mind that there are other factors to consider, too.
ASX:APM Earnings and Revenue Growth November 19th 2023
We note that hedge funds don't have a meaningful investment in APM Human Services International. Our data shows that Madison Dearborn Partners, LLC is the largest shareholder with 30% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 23% and 11%, of the shares outstanding, respectively. Megan Wynne, who is the second-largest shareholder, also happens to hold the title of Top Key Executive. In addition, we found that Michael Anghie, the CEO has 2.4% of the shares allocated to their name.
A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 54% stake.
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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of APM Human Services International
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.
Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.
It seems insiders own a significant proportion of APM Human Services International Limited. Insiders own AU$380m worth of shares in the AU$1.4b company. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public-- including retail investors -- own 21% stake in the company, and hence can't easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.
Private Equity Ownership
With an ownership of 30%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.
Private Company Ownership
We can see that Private Companies own 15%, of the shares on issue. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand APM Human Services International better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with APM Human Services International .
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.
