Individual investors who have a significant stake must be disappointed along with institutions after Santos Limited's (ASX:STO) market cap dropped by AU$3.2b




  • In Business
  • 2022-09-26 22:17:53Z
  • By Simply Wall St.
 

A look at the shareholders of Santos Limited (ASX:STO) can tell us which group is most powerful. We can see that individual investors own the lion's share in the company with 59% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Following a 12% decrease in the stock price last week, individual investors suffered the most losses, but institutions who own 36% stock also took a hit.

Let's take a closer look to see what the different types of shareholders can tell us about Santos.

Check out our latest analysis for Santos

What Does The Institutional Ownership Tell Us About Santos?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

Santos already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Santos' historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Santos. State Street Global Advisors, Inc. is currently the company's largest shareholder with 5.1% of shares outstanding. In comparison, the second and third largest shareholders hold about 5.1% and 4.1% of the stock.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Santos

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our most recent data indicates that insiders own less than 1% of Santos Limited. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. As it is a large company, we'd only expect insiders to own a small percentage of it. But it's worth noting that they own AU$25m worth of shares. In this sort of situation, it can be more interesting to see if those insiders have been buying or selling.

General Public Ownership

The general public -- including retail investors -- own 59% of Santos. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Private Company Ownership

We can see that Private Companies own 5.2%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Santos (at least 2 which are significant) , and understanding them should be part of your investment process.

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.

Join A Paid User Research Session
You'll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here

COMMENTS

More Related News

While institutions own 36% of Victoria Gold Corp. (TSE:VGCX), individual investors are its largest shareholders with 42% ownership
While institutions own 36% of Victoria Gold Corp. (TSE:VGCX), individual investors are its largest shareholders with 42% ownership

To get a sense of who is truly in control of Victoria Gold Corp. ( TSE:VGCX ), it is important to understand the...

Insiders are the top stockholders in Sarcos Technology and Robotics Corporation (NASDAQ:STRC), and the recent 19% drop might have disappointed them
Insiders are the top stockholders in Sarcos Technology and Robotics Corporation (NASDAQ:STRC), and the recent 19% drop might have disappointed them

If you want to know who really controls Sarcos Technology and Robotics Corporation ( NASDAQ:STRC ), then you'll have to...

With 88% ownership of the shares, Smith & Nephew plc (LON:SN.) is heavily dominated by institutional owners
With 88% ownership of the shares, Smith & Nephew plc (LON:SN.) is heavily dominated by institutional owners

A look at the shareholders of Smith & Nephew plc ( LON:SN. ) can tell us which group is most powerful. The group...

One Just Group plc (LON:JUST) insider upped their stake by 14% in the previous year
One Just Group plc (LON:JUST) insider upped their stake by 14% in the previous year

Insiders were net buyers of Just Group plc's ( LON:JUST ) stock during the past year. That is, insiders bought more...

A number of insiders bought LSL Property Services plc (LON:LSL) stock last year, which is great news for shareholders
A number of insiders bought LSL Property Services plc (LON:LSL) stock last year, which is great news for shareholders

It is usually uneventful when a single insider buys stock. However, When quite a few insiders buy shares, as it...

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

  • {nomadcock.com
    (2022-09-27 20:02:42Z)

    My brother suggested I might like this web site.
    He was entirely right. This post actually made my
    day. You can not imagine just how much time I had spent for this information! Thanks!

    REPLY

Top News: Business