Key Insights
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Institutions' substantial holdings in Sims implies that they have significant influence over the company's share price
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A total of 6 investors have a majority stake in the company with 52% ownership
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Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business
Every investor in Sims Limited (ASX:SGM) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are institutions with 46% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
Given the vast amount of money and research capacities at their disposal, institutional ownership tends to carry a lot of weight, especially with individual investors. Hence, having a considerable amount of institutional money invested in a company is often regarded as a desirable trait.
Let's delve deeper into each type of owner of Sims, beginning with the chart below.
View our latest analysis for Sims
What Does The Institutional Ownership Tell Us About Sims?
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.
As you can see, institutional investors have a fair amount of stake in Sims. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Sims, (below). Of course, keep in mind that there are other factors to consider, too.
Hedge funds don't have many shares in Sims. Looking at our data, we can see that the largest shareholder is Mitsui & Co., Ltd. with 18% of shares outstanding. For context, the second largest shareholder holds about 16% of the shares outstanding, followed by an ownership of 5.8% by the third-largest shareholder.
On further inspection, we found that more than half the company's shares are owned by the top 6 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.
Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Sims
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.