In this analysis, my focus will be on developing a perspective on Ashapura Minechem Limited’s (NSEI:ASHAPURMIN) latest ownership structure, a less discussed, but important factor. Ownership structure of a company has been found to affect share performance over time. 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 ASHAPURMIN’s shareholder registry. All data provided is as of the most recent financial year end.
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Institutional Ownership
Institutions account for 24.94% of ASHAPURMIN’s outstanding shares, a significant enough holding to move stock prices if they start buying and selling in large quantities, especially when there are relatively small amounts of shares available on the market to trade. Although ASHAPURMIN has a high institutional ownership, such stock moves, in the short-term, are more commonly linked to a particular type of active institutional investors – hedge funds. In the case of ASHAPURMIN, investors need not worry about such volatility considering active hedge funds don’t have a significant stake. However, we should dig deeper into ASHAPURMIN’s ownership structure and find out how other key ownership classes can affect its investment profile.
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. A major group of owners of ASHAPURMIN is individual insiders, sitting with a hefty 44.14% stake in the company. Broadly, insider ownership of this level has been found to negatively affect companies with consistently low PE ratio (underperforming). And a positive impact has been seen on companies with a high PE ratio (outperforming). It may be interesting to take a look at what company insiders have been doing with their holdings lately. While insider buying is possibly a sign of a positive outlook for the company, selling doesn’t necessarily indicate a negative outlook as they may be selling to meet personal financial needs.
General Public Ownership
A substantial ownership of 16.75% in ASHAPURMIN is held by the general public. This size of ownership gives retail investors collective power in deciding on major policy decisions such as executive compensation, appointment of directors and acquisitions of businesses. This level of ownership gives retail investors the power to sway key policy decisions such as board composition, executive compensation, and potential acquisitions. This is a positive sign for an investor who wants to be involved in key decision-making of the company.