Schaffer Corporation Limited (ASX:SFC) insiders have significant skin in the game with 53% ownership

editorial-team@simplywallst.com (Simply Wall St)

Thu, Oct 26, 2023, 11:11 PM 4 min read

Key Insights

Insiders appear to have a vested interest in Schaffer's growth, as seen by their sizeable ownership
A total of 5 investors have a majority stake in the company with 57% ownership
17% of Schaffer is held by Institutions

Every investor in Schaffer Corporation Limited (ASX:SFC) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 53% to be precise, is individual insiders. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

With such a notable stake in the company, insiders would be highly incentivised to make value accretive decisions.

Let's take a closer look to see what the different types of shareholders can tell us about Schaffer.

See our latest analysis for Schaffer

ownership-breakdown — ASX:SFC Ownership Breakdown October 27th 2023

What Does The Institutional Ownership Tell Us About Schaffer?

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.

As you can see, institutional investors have a fair amount of stake in Schaffer. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Schaffer's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth — ASX:SFC Earnings and Revenue Growth October 27th 2023

Hedge funds don't have many shares in Schaffer. The company's CEO John Schaffer is the largest shareholder with 25% of shares outstanding. With 9.6% and 7.8% of the shares outstanding respectively, Blanka Schaffer and Mutual Trust Pty Ltd, Asset Management Arm are the second and third largest shareholders.

Our research also brought to light the fact that roughly 57% of the company is controlled by the top 5 shareholders suggesting that these owners wield significant influence on the business.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Schaffer

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.

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.

Our most recent data indicates that insiders own the majority of Schaffer Corporation Limited. This means they can collectively make decisions for the company. Given it has a market cap of AU$227m, that means they have AU$120m worth of shares. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 17% stake in Schaffer. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Company Ownership

Our data indicates that Private Companies hold 13%, of the company's shares. 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:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Schaffer (of which 1 makes us a bit uncomfortable!) you should know about.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.