Who Are The Largest Shareholders In Anteo Diagnostics Limited (ASX:ADO)?
Brandon Murphy December 14, 2017
In this analysis, my focus will be on developing a perspective on Anteo Diagnostics Limited’s (
ASX:ADO) latest ownership structure, a less discussed, but important factor. Ownership structure has been found to have an impact on shareholder returns in both short- and long-term. Differences in ownership structure of companies can have a profound effect on how management’s incentives are aligned with shareholder returns, and whether they adhere to corporate governance best practices. Although this is an important factor for long-term investors, many investors can also be impacted by institutional presence and their high-volume trading. Therefore, I will take a look at ADO’s shareholders in more detail.
ASX:ADO Ownership_summary Dec 14th 17
Institutional Ownership
Due to the big order sizes of institutional investors, a company’s shares can experience large, one-sided momentum, driven by high volume of shares removed from, or injected into, the market. With an institutional ownership of 3.71%, ADO doesn’t seem too exposed to higher volatility resulting from institutional trading. Less covered stocks like ADO used to feature in legendary investor Peter Lynch’s portfolio, which would later be bought up by fast-following institutions as the stock gained more popularity.
Insider Ownership
Insiders form another group of important ownership types as they manage the company’s operations and decide the best use of capital. Insider ownership has been linked to better alignment between management and shareholders. ADO insiders are also influential stakeholders with 6.69% ownership in the company. This level of ownership indicates closely aligned interests of shareholders and management. It may be interesting to see what insiders have been doing with their shares lately. Insiders buying shares can be a positive indicator of future performance, but a selling decision can be simply driven by personal financial needs.
ASX:ADO Insider_trading Dec 14th 17
General Public Ownership
The general public holds a substantial 72.78% stake in ADO, making it a highly popular stock among retail investors. With this size of ownership, retail investors can collectively play a role in major company policies that affect shareholders returns, including executive remuneration and the appointment of directors. They can also exercise the power to decline an acquisition or merger that may not improve profitability.
Private Company Ownership
Another group of owners that a potential investor in ADO should consider are private companies, with a stake of 16.82%. While they invest more often due to strategic interests, an investment can also be driven by capital gains through share price appreciation. With this size of ownership in ADO, this ownership class can affect the company’s business strategy. As a result, potential investors should further explore the company’s business relations with these companies and find out if they can affect shareholder returns in the long-term.
What this means for you:
Institutional ownership level and composition in ADO is not high nor active enough to significantly impact its investment thesis. However, if you are building an investment case for ADO, ownership structure alone should not dictate your decision to buy or sell the stock. Instead, you should be evaluating company-specific factors such as Anteo Diagnostics’s past track record and financial health. I highly recommend you to complete your research by taking a look at the following:
1.
Financial Health: Is ADO’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our
financial health checks here.
2.
Past Track Record: Has ADO been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look at
the free visual representations of ADO’s historicals for more clarity.
3.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our
free list of these great stocks here.
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