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Every investor in E2E Networks Limited (NSE:E2E) should be aware of the most powerful shareholder groups.
Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time.
Warren Buffett said that he likes ‘a business with enduring competitive advantages that is run by able and owner-oriented people’. So it’s nice to see some insider ownership, because it may suggest that management is owner-oriented.
E2E Networks is not a large company by global standards. It has a market capitalization of ₹598m, which means it wouldn’t have the attention of many institutional investors.
Taking a look at the our data on the ownership groups (below), it’s seems that
institutions don’t own shares in the company.
Let’s delve deeper into each type of owner, to discover more about E2E.
What Does The Lack Of Institutional Ownership Tell Us About E2E Networks?
Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it’s unusual to see larger companies without any institutional investors.
There are multiple explanations for why institutions don’t own a stock. The most common is that the company is too small relative to fund under management, so the institition does not bother to look closely at the company.
Alternatively, there might be something about the company that has kept institutional investors away.
E2E Networks might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.
E2E Networks is not owned by hedge funds.
Our information suggests that there isn’t any analyst coverage of the stock, so it is probably little known.
Insider Ownership Of E2E Networks
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders.
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.
Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.
It seems that insiders own more than half the E2E Networks Limited stock. This gives them a lot of power.
Given it has a market cap of ₹598m, that means they have ₹379m worth of shares.
It is good to see this level of investment. You can check here to see if those insiders have been buying recently.
General Public Ownership
The general public, with a 19% stake in the company, will not easily be ignored.
This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.
Private Equity Ownership
With a stake of 17%, private equity firms could influence the E2E board.
Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.
While it is well worth considering the different groups that own a company, there are other factors that are even more important.
I always like to check for a history of revenue growth. You can too, by accessing this free chart of historic revenue and earnings in this detailed graph.
If you would prefer check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, backed by strong financial data.
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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.
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