Painful week for individual investors invested in ARB Corporation Limited (ASX:ARB) after 5.5% drop, institutions also suffered losses

If you want to know who actually controls ARB Corporation Limited (ASX:ARB), then you will need to look at the composition of its share register. The group holding the largest number of shares in the company, around 56% to be precise, are individual investors. In other words, the group faces the maximum upside potential (or downside risk).

While institutions that hold 34% have come under pressure after the market capitalization fell to A$2.6tn last week, individual investors suffered the most losses.

Let’s dive deeper into each type of ARB owner, starting with the table below.

See our latest analysis for ARB

ASX: ARB Ownership Breakdown August 29, 2022

What does institutional ownership tell us about ARB?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

ARB already has institutions on the share register. Indeed, they hold a respectable stake in the company. This implies that analysts working for these institutions have reviewed the stock and like it. But like everyone else, they can be wrong. If multiple institutions change their minds on a stock at the same time, you could see the stock price drop quickly. So it’s worth checking out ARB’s earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
ASX: ARB Earnings and Revenue Growth August 29, 2022

ARB does not belong to hedge funds. The company’s largest shareholder is Roger Brown, with a 6.0% stake. With 4.5% and 2.0% of the shares outstanding, respectively, The Vanguard Group, Inc. and Formax Pty Ltd are the second and third largest shareholders.

A closer look at our ownership data shows that the top 25 shareholders collectively own less than half of the register, suggesting a large group of small shareholders where no single shareholder has a majority.

Institutional ownership research is a good way to assess and filter the expected performance of a stock. The same can be obtained by studying the feelings of the analyst. There are a reasonable number of analysts covering the stock, so it might be useful to know their overall view on the future.

ARB Insider Ownership

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management is ultimately responsible to the board of directors. However, it is not uncommon for managers to be members of the management board, especially if they are founders or CEOs.

I generally consider insider ownership to be a good thing. However, there are times when it is more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders hold certain shares of ARB Corporation Limited. It’s a pretty big company, so it’s generally a positive to see a potentially meaningful alignment. In this case, they hold approximately A$188 million worth of shares (at current prices). If you want to explore the issue of insider alignment, you can click here to see if insiders have been buying or selling.

General public property

The general public, who are usually individual investors, hold a substantial 56% stake in ARB, suggesting that it is quite a popular stock. This level of ownership gives mainstream investors some power to influence key policy decisions such as board composition, executive compensation and dividend payout ratio.

Next steps:

While it is worth considering the different groups that own a business, there are other, even more important factors. For example, we have identified 1 warning sign for ARB of which you should be aware.

At the end of the day the future is the most important. You can access this free analyst forecast report for the company.

NB: The figures in this article are calculated using trailing twelve month data, which refers to the 12 month period ending on the last day of the month the financial statements are dated. This may not be consistent with the annual report figures for the full year.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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