In this article, I’m going to take a look at The Fertilisers And Chemicals Travancore Limited’s (NSEI:FACT) latest ownership structure, a non-fundamental factor which is important, but remains a less discussed subject among investors. Ownership structure has been found to have an impact on shareholder returns in both short- and long-term. Since the effect of an active institutional investor with a similar ownership as a passive pension-fund can be vastly different on a company’s corporate governance and accountability of shareholders, investors should take a closer look at FACT’s shareholder registry. All data provided is as of the most recent financial year end.
Check out our latest analysis for Fertilisers And Chemicals Travancore
Institutional Ownership
Institutional investors transact in large blocks which can influence the momentum of stock prices, at least in the short-term, especially when there is a low level of public shares available on the market to trade. A low institutional ownership of 8.56% puts FACT on a list of companies that are not likely exposed to spikes in volatility resulting from institutional trading. Less covered stocks like FACT used to feature in legendary investor Peter Lynch’s portfolio, which would later be bought up by fast-following institutions as the stock gained more popularity.
Insider Ownership
Insiders form another group of important ownership types as they manage the company’s operations and decide the best use of capital. Insider ownership has been linked to better alignment between management and shareholders. Although individuals in FACT hold only a minor stake, it’s a good sign for shareholders as the company’s executives and directors have their incentives directly linked to the company’s performance. In addition to this, it may be interesting to look at insider buying and selling activities. Keep in mind that buying may be sign of upbeat future expectations, but selling doesn’t necessarily mean the opposite as the insiders might just be doing it out of their personal financial needs.
General Public Ownership
The general public, with a stake of less than 1%, is a relatively minor group of shareholders in FACT. This size of ownership, while considerably small for a public company, may not be enough to change company policy if the decision is not in sync with other large shareholders.
What this means for you:
Institutional ownership in FACT is not at a level that would concern investors. We are less likely to see sustained downtrends or significant volatility resulting from large institutional trading. However, ownership structure should not be the only determining factor when you’re building an investment thesis for FACT. Rather, you should be examining fundamental factors such as the intrinsic valuation, which is a key driver of Fertilisers And Chemicals Travancore’s share price. I highly recommend you to complete your research by taking a look at the following: