Karooooo Ltd.'s (NASDAQ:KARO) most bullish insider, CEO Isaias Jose Calisto must be pleased with the recent 7.6% gain
Key Insights
- Karooooo's significant insider ownership suggests inherent interests in company's expansion
- The largest shareholder of the company is Isaias Jose Calisto with a 69% stake
- Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company
A look at the shareholders of Karooooo Ltd. (NASDAQ:KARO) can tell us which group is most powerful. The group holding the most number of shares in the company, around 69% to be precise, is individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).
As a result, insiders were the biggest beneficiaries of last week’s 7.6% gain.
In the chart below, we zoom in on the different ownership groups of Karooooo.
See our latest analysis for Karooooo
What Does The Institutional Ownership Tell Us About Karooooo?
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 companies to have some institutions on the register, especially if they are growing.
Karooooo already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Karooooo's earnings history below. Of course, the future is what really matters.
Our data indicates that hedge funds own 7.1% of Karooooo. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. With a 69% stake, CEO Isaias Jose Calisto is the largest shareholder. With such a huge stake, we infer that they have significant control of the future of the company. It's usually considered a good sign when insiders own a significant number of shares in the company, and in this case, we're glad to see a company insider with such skin in the game. For context, the second largest shareholder holds about 7.1% of the shares outstanding, followed by an ownership of 1.3% by the third-largest shareholder.
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. 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 Karooooo
The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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 information suggests that insiders own more than half of Karooooo Ltd.. This gives them effective control of the company. Insiders own US$1.0b worth of shares in the US$1.5b company. That's extraordinary! Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if they have been selling down their stake.
General Public Ownership
The general public, who are usually individual investors, hold a 17% stake in Karooooo. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Karooooo is showing 1 warning sign in our investment analysis , you should know about...
If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.
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.