Key Insights

• Significant control over Servcorp by private companies implies that the general public has more power to influence management and governance-related decisions
• 57% of the business is held by the top 2 shareholders
• Recent purchases by insiders

If you want to know who really controls Servcorp Limited (ASX:SRV), then you'll have to look at the makeup of its share registry. We can see that private companies own the lion's share in the company with 50% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Meanwhile, individual investors make up 24% of the company’s shareholders.

In the chart below, we zoom in on the different ownership groups of Servcorp.

Check out our latest analysis for Servcorp

What Does The Institutional Ownership Tell Us About Servcorp?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

We can see that Servcorp does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Servcorp's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Servcorp. Sovori Pty Ltd is currently the company's largest shareholder with 48% of shares outstanding. FMR LLC is the second largest shareholder owning 9.4% of common stock, and Perpetual Limited holds about 7.9% of the company stock. Furthermore, CEO Alfred Moufarrige is the owner of 3.0% of the company's shares.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Servcorp

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. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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.

We can see that insiders own shares in Servcorp Limited. In their own names, insiders own AU$17m worth of stock in the AU$520m company. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public-- including retail investors -- own 24% stake in the company, and hence can't easily be ignored. 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.

Private Company Ownership

We can see that Private Companies own 50%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 1 warning sign for Servcorp you should be aware of.

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.