The recent 14% gain must have brightened Top Key Executive Dinesh Talwar's week, Danish Power Limited's (NSE:DANISH) most bullish insider

Key Insights

• Danish Power's significant insider ownership suggests inherent interests in company's expansion
• 68% of the company is held by a single shareholder (Dinesh Talwar)
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

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To get a sense of who is truly in control of Danish Power Limited (NSE:DANISH), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 74% to be precise, is individual insiders. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, insiders scored the highest last week as the company hit ₹14b market cap following a 14% gain in the stock.

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

See our latest analysis for Danish Power

What Does The Lack Of Institutional Ownership Tell Us About Danish Power?

Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.

There are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at the company. Alternatively, there might be something about the company that has kept institutional investors away. Danish Power's earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.

Hedge funds don't have many shares in Danish Power. Our data suggests that Dinesh Talwar, who is also the company's Top Key Executive, holds the most number of shares at 68%. When an insider holds a sizeable amount of a company's stock, investors consider it as a positive sign because it suggests that insiders are willing to have their wealth tied up in the future of the company. With 5.5% and 0.0005% of the shares outstanding respectively, Shivam Talwar and Puneet Talwar are the second and third largest shareholders. Note that two of the top three shareholders are also Chief Executive Officer and Member of the Board of Directors, respectively, once again pointing to significant ownership by company insiders.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Danish Power

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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own the majority of Danish Power Limited. This means they can collectively make decisions for the company. So they have a ₹10b stake in this ₹14b business. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 26% stake in Danish Power. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example - Danish Power has 2 warning signs (and 1 which doesn't sit too well with us) we think you should know about.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.