Nasdaq
華爾街日報Hero MotoCorp Limited's (NSE:HEROMOTOCO) high institutional ownership speaks for itself as stock continues to impress, up 5.3% over last week
Key Insights
- Significantly high institutional ownership implies Hero MotoCorp's stock price is sensitive to their trading actions
- 50% of the business is held by the top 6 shareholders
- Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company
A look at the shareholders of Hero MotoCorp Limited (NSE:HEROMOTOCO) can tell us which group is most powerful. With 42% stake, institutions possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).
And as as result, institutional investors reaped the most rewards after the company's stock price gained 5.3% last week. The gains from last week would have further boosted the one-year return to shareholders which currently stand at 46%.
Let's delve deeper into each type of owner of Hero MotoCorp, beginning with the chart below.
Check out our latest analysis for Hero MotoCorp
What Does The Institutional Ownership Tell Us About Hero MotoCorp?
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.
As you can see, institutional investors have a fair amount of stake in Hero MotoCorp. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Hero MotoCorp, (below). Of course, keep in mind that there are other factors to consider, too.
Hedge funds don't have many shares in Hero MotoCorp. Bahadur Chand Investments Private Limited is currently the company's largest shareholder with 20% of shares outstanding. With 14% and 6.5% of the shares outstanding respectively, Brijimohan Lal Om Prakash Partnership Firm and Life Insurance Corporation of India are the second and third largest shareholders.
We also observed that the top 6 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.
Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
Insider Ownership Of Hero MotoCorp
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.
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 Hero MotoCorp Limited. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own ₹4.0b of stock. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.
General Public Ownership
With a 23% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Hero MotoCorp. 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.
Private Company Ownership
Our data indicates that Private Companies hold 34%, of the company's shares. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Hero MotoCorp better, we need to consider many other factors. Take risks for example - Hero MotoCorp has 1 warning sign we think you should be aware of.
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.
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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.