Institutional investors in Blue Label Telecoms Limited (JSE:BLU) lost 10% in the past week but enjoyed longer-term gains

Every investor in Blue Label Telecoms Limited (JSE:BLU) should know the most powerful shareholder groups. We can see that institutions hold the lion’s share of the business with 37% ownership. That is, the group will benefit the most if the stock goes up (or lose the most if there is a downturn).

No shareholder likes losing money on their investments, especially institutional investors who saw their holdings drop 10% in value last week. However, the 11% one-year return to shareholders may have helped ease their pain. But they would probably be wary of future losses.

In the graph below, we zoom in on the different ownership groups of Blue Label Telecoms.

If you are not interested in researching BLU’s ownership structure, we have a free list of interesting investment ideas to potentially inspire your next investment!

JSE: distribution of ownership of BLU as of August 31, 2022

What does institutional ownership tell us about Blue Label telecoms?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it is included in a major index. We would expect most companies to have some institutions listed, especially if they are growing.

We see that Blue Label Telecoms has many institutional investors; and they own a good part of the shares of the company. This implies that analysts working for these institutions have reviewed the stock and like it. But like everyone else, they can be wrong. It is not uncommon to see a sharp decline in the stock price if two large institutional investors attempt to sell a stock at the same time. It is therefore worth checking the past earnings trajectory of Blue Label Telecoms (below). Of course, keep in mind that there are other factors to consider as well.

JSE: BLU Earnings and Revenue Growth as of August 31, 2022

We note that hedge funds have no significant investment in Blue Label Telecoms. The company’s largest shareholder is Allan Gray Limited with a 20% stake. Kevin Ellerine is the second largest shareholder with 14% of the common stock and Brett Levy owns approximately 9.7% of the company’s stock. Brett Levy, who is the third shareholder, also holds the title of member of the board of directors. Additionally, we found that Mark Levy, the CEO, owns 8.9% of the shares allocated to their name.

Our research also brought to light the fact that around 52% of the company is controlled by the 4 major shareholders, suggesting that these owners wield significant influence over the company.

Institutional ownership research is a good way to assess and filter the expected performance of a stock. The same can be obtained by studying the feelings of the analyst. We don’t see any analyst coverage of the stock at this time, so the company is unlikely to be widely held.

Blue Label Telecoms Insider Ownership

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The management of the company runs the company, but the CEO will answer to the board of directors, even if he is a member of it.

Most view insider ownership as a positive because it can indicate that the board is well aligned with other shareholders. However, there are times when too much power is concentrated within this group.

It appears that insiders hold a large share of Blue Label Telecoms Limited. It has a market capitalization of just R5.7 billion and insiders have shares worth R1.9 billion in their own names. It’s great to see insiders so invested in the company. It might be worth checking to see if these insiders have bought recently.

General public property

The general public, generally individual investors, holds 26% of the capital of Blue Label Telecoms. This size of ownership, although considerable, may not be sufficient to change company policy if the decision is not in line with other major shareholders.

Private Company Ownership

We can see that private companies hold 3.1% of the issued shares. It’s hard to draw conclusions from this fact alone, so it’s worth investigating who owns these private companies. Sometimes insiders or other related parties have an interest in shares of a public company through a separate private company.

Next steps:

While it is worth considering the different groups that own a business, there are other, even more important factors. Example: we have identified 1 warning sign for Blue Label telecoms you should be aware.

If you’d rather check out another company – one with potentially superior finances – then don’t miss this free list of interesting companies, supported by solid financial data.

NB: The figures in this article are calculated using trailing twelve month data, which refers to the 12 month period ending on the last day of the month the financial statements are dated. This may not be consistent with the annual report figures for the full year.

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

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Robert D. Coleman