Key insights
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The significant control of Diversified United Investment by retail investors suggests that the general public has more power to influence management and governance decisions
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47% of the business is held by the 19 largest shareholders
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Recent insider purchases
A look at the shareholders of Diversified United Investment Limited (ASX:DUI) can tell us which group is the most powerful. With a 53% stake, retail investors hold the maximum stake in the company. Put another way, the group faces maximum upside potential (or downside risk).
Institutions, on the other hand, represent 40% of the company’s shareholders. Institutions often own shares in more established companies, while it is not uncommon to see insiders owning quite a few smaller companies.
In the chart below, we zoom in on Diversified United Investment’s various ownership groups.
Check out our latest analysis on diversified pooled investments
What does institutional ownership tell us about diversified pooled investments?
Many institutions measure their performance against an index that approximates the local market. So they tend to pay more attention to companies that are included in the major indexes.
We can see that Diversified United Investment has institutional investors; and they hold a good chunk of the company’s stock. This means that analysts working for these institutions have looked at the stock and like it. But like everyone else, they can be wrong. When several institutions hold shares, there is always the risk that they are in “crowded trading”. When such a trade goes awry, multiple parties can compete to quickly sell shares. This risk is higher in a company without a history of growth. You can view Diversified United Investment’s historical earnings and earnings below, but keep in mind that there is always more to the story.
Diversified United Investment is not owned by hedge funds. The largest shareholder in the company is the Ian Potter Foundation, Endowment Arm, with a 17% ownership. In comparison, the second and third largest shareholders hold about 7.5% and 6.6% of the shares.
In examining our ownership data, we found that 19 of the largest shareholders collectively own less than 50% of the share register, meaning that no one person has a majority stake.
Institutional ownership research is a good way to measure and filter the expected performance of a stock. The same can be achieved by studying analyst sentiment. As far as we can tell, there’s no analyst coverage of the company, so it’s probably flying under the radar.
Insider Ownership of Diversified Pooled Investments
The definition of company insiders can be subjective and varies from jurisdiction to jurisdiction. Our data reflects individual insiders, covering at least board members. The company’s management runs the business, but the CEO will be accountable to the board even if he or she is a member.
Most believe that having inside information is positive because it can indicate that the board is well aligned with other shareholders. In some cases, however, too much power is concentrated in this group.
Shareholders may be interested to learn that insiders own shares in Diversified United Investment Limited. As individuals, the insiders collectively own A$50 million in the A$1.1 billion company. It’s good to see some insider investments, but it might be worth checking to see if those insiders have been buying.
Common public property
The general public, consisting primarily of individual investors, collectively holds 53% of the shares of Diversified United Investment. This level of ownership gives investors from the general public some power to influence key policy decisions such as board composition, executive compensation and dividend payout ratio.
Next steps:
It’s always worth thinking about the different groups that own shares in a company. But to better understand Diversified United Investment, we need to consider many other factors.
I like to dive deeper how a company has performed in the past. You can find historical earnings and profits in this detailed graphics.
If you’d rather check out another company — one with potentially better financials — then don’t miss this one Free of charge a list of interesting companies backed by strong financial data.
NB: The figures in this article have been calculated using data from the last twelve months, which refers to the 12-month period ending on the last date of the month in which the financial statements are dated. This may not be consistent with the annual report figures for the full year.
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This article from Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts, using only an 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. We aim to provide you with long-term focused analysis driven by fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or quality materials. Simply Wall St has no position in the stocks mentioned.
