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The major shareholder groups of Compass Group PLC (LON: CPG) have power over the company. Insiders often own a large portion of younger, smaller companies, while large companies tend to have institutions as shareholders. Companies that have been privatized tend to have low levels of insider ownership.
With a market capitalization of £ 26bn, Compass Group is quite large. We would expect to see institutional investors on the register. Companies of this size are also usually well known to private investors. In the graph below we can see that institutional investors have bought into the company. Let’s take a closer look at what the various types of shareholders can tell us about the Compass Group.
Check out our latest analysis for Compass Group
What does institutional ownership tell us about Compass Group?
Institutional investors often compare their own returns to the returns of a frequently tracked index. As a result, they typically consider buying larger companies that are included in the relevant benchmark index.
We can see that Compass Group has institutional investors; and they hold a good chunk of the company’s stock. This implies that the analysts who work for these institutions have looked at the stock and like it. But like everyone else, they can be wrong too. It’s not uncommon for the stock price to drop sharply when two large institutional investors are trying to sell a stock at the same time. So it is worth checking the earnings performance of the Compass Group so far (below). Of course, keep in mind that there are other factors to consider as well.
Investors should note that institutions actually own more than half of the company, so together they can exert significant power. Hedge funds don’t have many stakes in Compass Group. The company’s largest shareholder is BlackRock, Inc. with a 7.6% stake. In comparison, the second and third largest shareholders hold around 6.4% and 4.0% of the shares, respectively.
After further research, we found that the top 25 collectively own 51% of the company, suggesting that no single shareholder has significant control over the company.
Studying institutional ownership is a great way to measure and filter the expected performance of a stock. The same can be achieved by examining the sentiments of the analysts. Quite a few analysts cover the stock so you can easily look at the forecast growth.
Compass Group insider property
While the exact definition of an insider can be subjective, almost every board member considers an insider. Management ultimately replies to the board. However, it is not uncommon for managers to be board members, especially when they are founders or CEOs.
Insider ownership is positive when it signals that management thinks like the real owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative under certain circumstances.
Our latest data shows that Insiders own less than 1% of Compass Group PLC. Since this is a large company, we would only expect a small percentage from insiders. It’s worth noting, however, that they own £ 13 million worth of stocks. In such a situation, it can be more interesting to see if those insiders bought or sold.
General public property
The public holds 13% of the shares in the Compass Group. While this size of ownership is substantial, it may not be enough to change company policy if the decision does not coincide with other major shareholders.
Next Steps:
I find it very interesting to see who exactly owns a company. But to really gain insight, we need to consider other information as well. For example, think of risks. Every company has them and we discovered them 1 warning sign for Compass Group you should know.
If you’re like me, you might want to think about whether this company is going to grow or shrink. Fortunately, you can check out this free analyst forecast report for the future.
Note: The numbers in this article are calculated using data for the past twelve months, which refers to the twelve month period ending on the last day of the month in which the financial statements are dated. This may not match the figures in the annual financial statements.
This article from Simply Wall St is of a general nature. We only provide comments based on historical data and analyst projections using an unbiased methodology, and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks and does not take into account your goals or your financial situation. Our goal is to provide you with long-term, focused analysis based on fundamentals. Note that our analysis may not take into account the latest company announcements or quality material, which may be sensitive to the price. Simply Wall St has no position in the stocks mentioned.
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