Institutions profited after Capital Appreciation Limited (JSE: CTA) market capitalization rose by R209 million last week, but individual investors benefited the most

A look at the shareholders of Capital Appreciation Limited (JSE: CTA) can tell us which group is more powerful. We can see that the individual investors hold the lion’s share in the company with 42% of the capital. In other words, the group has everything to gain (or lose the most) from its investment in the business.

While individual investors were the group that benefited the most from last week’s R209 million market capitalization gain, institutions also held a 31% share in those profits.

In the graphic below, we zoom in on the different ownership groups of Capital Appreciation.

See our latest analysis for capital appreciation

Breakdown of JSE property: CTA November 29, 2021

What does institutional ownership tell us about capital appreciation?

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 businesses to have some institutions listed, especially if they are growing.

Capital Appreciation already has institutions registered in the share register. Indeed, they hold a respectable stake in the company. This implies that analysts working for these institutions have reviewed the action and appreciate it. But like everyone else, they could be wrong. When several institutions hold a stock, there is always a risk that they are in a “crowded trade”. When such a transaction goes awry, several parties may compete with each other to sell shares quickly. This risk is higher in a company without a history of growth. You can see Capital Appreciation’s historical earnings and income below, but keep in mind that there is always more to tell.

profit and revenue growth
JSE: CTA Profits and Revenue Growth November 29, 2021

We note that hedge funds do not have a significant investment in capital appreciation. Looking at our data, we can see that the largest shareholder is Public Investment Corporation Limited with 27% of the shares outstanding. In comparison, the second and third shareholders hold around 6.1% and 5.8% of the capital. In addition, the CEO of the company, Michael Pimstein, directly owns 4.9% of the total shares outstanding.

We also observed that the top 6 shareholders make up more than half of the share register, with a few smaller shareholders to some extent to balance the interests of the larger ones.

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 the expected performance of a stock. We do not see any analyst coverage of the stock at this time, so the company is unlikely to be widely held.

Insider ownership of capital appreciation

The definition of an insider may differ slightly from country to country, but board members still count. The management ultimately reports to the board of directors. However, it is not uncommon for managers to be board members, especially if they are founders or CEOs.

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.

Our information suggests that insiders retain a significant stake in Capital Appreciation Limited. Insiders own R1.8b shares worth R289 million. This may suggest that the founders still own a lot of shares. You can click here to see if they bought or sold.

General public property

The general public, including retail investors, own 42% of the company’s equity and therefore cannot be easily ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in line with other large shareholders.

Private shareholders

With a 5.8% stake, private equity firms are able to play a role in shaping corporate strategy with an emphasis on value creation. Some might like this, as private capital is sometimes activists holding management to account. But other times, the private equity sells, after you take the company public.

Owned by a private company

Our data indicates that private companies own 6.1% of the company’s shares. Private companies can be related parties. Sometimes insiders have an interest in a public company through a stake in a private company, rather than in their own capacity as an individual. While it is difficult to draw general conclusions, it should be noted that this is an area for further research.

Next steps:

While it is worth considering the different groups that own a business, there are other factors that are even more important. Be aware that capital appreciation shows 2 warning signs in our investment analysis , you must know…

Sure, you might find a fantastic investment looking elsewhere. So take a look at this free list of interesting companies.

NB: The figures in this article are calculated from data for the last twelve months, which refer to the 12-month period ending on the last date of the month of date of the financial statement. This may not be consistent with the figures in the annual report for the entire year.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in the mentioned stocks.

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