Institutional investors may take tough action after latest 11% drop in Castings PLC (LON:CGS) added to year-long losses
A look at the shareholders of Castings PLC (LON:CGS) can tell us which group is the most powerful. And the group that holds the biggest slice of the pie is made up of 72%-owned institutions. That is, the group will benefit the most if the stock goes up (or lose the most if there is a downturn).
And institutional investors saw the value of their holdings fall by 11% last week. The recent loss, on top of a 12% year-on-year loss to shareholders, may not sit well with this group of investors. Also called “smart money”, institutions have a big influence on how the price of a stock moves. Therefore, if the weakness in the Castings stock price continues, institutional investors may feel compelled to sell the stock, which may not be ideal for individual investors.
Let’s take a closer look at what different types of shareholders can tell us about Castings.
However, if you prefer to see where opportunities and risks are within the CGS industryyou can view our analysis of the UK metals and mining industry.
What does institutional ownership tell us about castings?
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it is included in a major index. We would expect most companies to have some institutions listed, especially if they are growing.
Castings already has institutions on the share register. Indeed, they hold a respectable stake in the company. This may indicate that the company has some degree of credibility in the investment community. However, it is best to be wary of relying on the so-called validation that accompanies institutional investors. They are also sometimes wrong. It is not uncommon to see a sharp decline in the stock price if two large institutional investors attempt to sell a stock at the same time. So it’s worth checking out Castings’ past revenue trajectory (below). Of course, keep in mind that there are other factors to consider as well.
Institutional investors own more than 50% of the company, so together they can probably heavily influence board decisions. Castings does not belong to hedge funds. Our data shows that Ruffer LLP is the largest shareholder with 21% of shares outstanding. Aberforth Partners LLP is the second largest shareholder with 14% common stock and Columbia Management Investment Advisers, LLC owns approximately 7.6% of the company’s stock.
Looking further, we found that 53% of the shares are held by the top 5 shareholders. In other words, these shareholders have a say in the decisions of the company.
While studying the institutional ownership of a company can add value to your research, it is also recommended that you research analyst recommendations to better understand a stock’s expected performance. There is some analyst coverage of the stock, but it could still become better known over time.
Insider Ownership of Castings
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The management of the company answers to the board of directors and the latter must represent the interests of the shareholders. In particular, sometimes the senior executives themselves sit on the board of directors.
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.
We may report that insiders hold shares in Castings PLC. As individuals, insiders collectively hold £5.8m worth of the £122m company. This shows at least some alignment, but we generally like to see larger insider holdings. You can click here to see if these insiders have been buying or selling.
General public property
The general public, including retail investors, owns 22% of the company’s capital and therefore cannot be easily ignored. Although this group may not necessarily make the decisions, they can certainly have a real influence on the way the business is run.
While it is worth considering the different groups that own a business, there are other, even more important factors. Example: we have identified 1 warning sign for casts you should be aware.
If you prefer to find out what analysts are predicting in terms of future growth, don’t miss this free analyst forecast report.
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.
Feedback on this article? Concerned about content? Get in touch with us directly. You can also email the editorial team (at) Simplywallst.com.
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.
Valuation is complex, but we help make it simple.
Find out if Castings is potentially overvalued or undervalued by viewing our full analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.
See the free analysis