NZME Limited (NZSE:NZM) is definitely on the radar of institutional investors who own 43% of the company
In This Article:
Key Insights
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Institutions' substantial holdings in NZME implies that they have significant influence over the company's share price
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51% of the business is held by the top 5 shareholders
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Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company
To get a sense of who is truly in control of NZME Limited (NZSE:NZM), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are institutions with 43% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
Since institutional have access to huge amounts of capital, their market moves tend to receive a lot of scrutiny by retail or 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 NZME, beginning with the chart below.
Check out our latest analysis for NZME
What Does The Institutional Ownership Tell Us About NZME?
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.
NZME 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. 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 NZME, (below). Of course, keep in mind that there are other factors to consider, too.
It looks like hedge funds own 18% of NZME shares. That's interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. Looking at our data, we can see that the largest shareholder is Spheria Asset Management Pty Ltd with 19% of shares outstanding. For context, the second largest shareholder holds about 10% of the shares outstanding, followed by an ownership of 9.8% by the third-largest shareholder. Furthermore, CEO Michael Boggs is the owner of 1.3% of the company's shares.
Our research also brought to light the fact that roughly 51% of the company is controlled by the top 5 shareholders suggesting that these owners wield significant influence on the business.