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• Given the large stake in the stock by institutions, Capital’s stock price might be vulnerable to their trading decisions

• A total of 7 investors have a majority stake in the company with 54% ownership

• Insider ownership in Capital is 16%

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If you want to know who really controls Capital Limited (LON:CAPD), then you’ll have to look at the makeup of its share registry. 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).

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 Capital, beginning with the chart below.

View our latest analysis for Capital

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.

Capital already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Capital’s earnings history below. Of course, the future is what really matters.

Hedge funds don’t have many shares in Capital. Looking at our data, we can see that the largest shareholder is Aegis Financial Corporation with 10% of shares outstanding. The second and third largest shareholders are Jamie Boyton and Fidelity International Ltd, with an equal amount of shares to their name at 10%. Jamie Boyton, who is the second-largest shareholder, also happens to hold the title of Top Key Executive.

On further inspection, we found that more than half the company’s shares are owned by the top 7 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own a reasonable proportion of Capital Limited. It has a market capitalization of just UK£267m, and insiders have UK£42m worth of shares in their own names. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

With a 38% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Capital. 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.

It’s always worth thinking about the different groups who own shares in a company. But to understand Capital better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we’ve spotted with Capital .

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

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