Generation Development Group Limited (ASX:GDG) surges 12%; retail investors who own 50% shares profited along with insiders
Simply Wall St
4 min read
Key Insights
The considerable ownership by retail investors in Generation Development Group indicates that they collectively have a greater say in management and business strategy
A total of 18 investors have a majority stake in the company with 50% ownership
If you want to know who really controls Generation Development Group Limited (ASX:GDG), then you'll have to look at the makeup of its share registry. We can see that retail investors own the lion's share in the company with 50% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
While retail investors were the group that benefitted the most from last week’s AU$26m market cap gain, insiders too had a 29% share in those profits.
Let's delve deeper into each type of owner of Generation Development Group, beginning with the chart below.
What Does The Institutional Ownership Tell Us About Generation Development 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.
Generation Development Group 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. 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 Generation Development Group's historic earnings and revenue below, but keep in mind there's always more to the story.
ASX:GDG Earnings and Revenue Growth May 1st 2023
Hedge funds don't have many shares in Generation Development Group. William Bessemer is currently the largest shareholder, with 7.0% of shares outstanding. Wilson Asset Management (International) Pty Limited is the second largest shareholder owning 6.9% of common stock, and Ellerston Capital Limited holds about 6.0% of the company stock.
Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 18 shareholders, meaning that no single shareholder has a majority interest in the ownership.
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 a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
Insider Ownership Of Generation Development Group
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 Generation Development Group Limited. It has a market capitalization of just AU$253m, and insiders have AU$72m worth of shares in their own names. 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
With a 50% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Generation Development Group. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
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.
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