This is what the shareholding structure of Formula Systems (1985) Ltd looks like. (TLV:FOUR)

Each investor in Formula Systems (1985) Ltd. (TLV:FORTY) must know the most powerful shareholder groups. Institutions often own shares in larger companies, and we expect to see insiders owning a noticeable percentage of smaller ones. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, “Don’t tell me what you think, tell me what you have in your wallet”.

Formula Systems (1985) has a market capitalization of ₪4.7 billion, so we expect some institutional investors to have noticed the stock. Our analysis of company ownership, below, shows that the institutions are visible on the share register. Let’s take a closer look at what different types of shareholders can tell us about Formula Systems (1985).

See our latest analysis for Formula Systems (1985)

TASE:FORTY Ownership Breakdown May 3, 2022

What does institutional ownership tell us about Formula Systems (1985)?

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 Formula Systems (1985) has many institutional investors; and they own a good part of the shares of the company. This may indicate that the company has some degree of credibility in the investment community. However, it is best to be wary of relying on the so-called validation that accompanies institutional investors. They are also sometimes wrong. If multiple institutions change their minds on a stock at the same time, you could see the stock price drop quickly. It is therefore worth looking at the earnings history of Formula Systems (1985) below. Of course, the future is what really matters.

earnings-and-revenue-growth
TASE:FORTY Earnings and Revenue Growth May 3, 2022

Formula Systems (1985) does not belong to hedge funds. The main shareholder of the company is Asseco Poland SA, with a 26% stake. For context, the second shareholder owns approximately 12% of the outstanding shares, followed by an 8.8% ownership by the third shareholder. Guy Bernstein, who is the second shareholder, also holds the title of managing director.

To make our study more interesting, we found that the top 4 shareholders control more than half of the company, which implies that this group has considerable influence on the decision-making of the company.

While it makes sense to study data on a company’s institutional ownership, it also makes sense to study analyst sentiment to find out which way the wind is blowing. Our information suggests there is no analyst coverage of the stock, so it is likely little known.

Insider ownership of Formula Systems (1985)

The definition of company insiders can be subjective and varies from jurisdiction to jurisdiction. Our data reflects individual insiders, capturing at least board members. Management is ultimately responsible to the board of directors. However, it is not uncommon for managers to be members of the management board, especially if they are founders or CEOs.

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.

Our most recent data indicates that insiders own a reasonable proportion of Formula Systems (1985) Ltd.. It has a market capitalization of only ₪4.7 billion, and insiders have ₪560 million of shares in their own name. It is quite significant. Good to see this level of investment. You can check here if these insiders have bought recently.

General public property

The general public, including retail investors, owns 13% of the company’s capital and therefore cannot be easily ignored. Although this group may not necessarily make the decisions, they can certainly have a real influence on the way the business is run.

Ownership of a public company

Public companies currently own 26% of the shares of Formula Systems (1985). It may be a strategic interest and both companies may have related business interests. They may have separated. This exploitation probably deserves further investigation.

Next steps:

I find it very interesting to see who exactly owns a business. But to really get insight, we also need to consider other information.

I like to dive deeper on the performance of a company in the past. You can access this interactive chart past earnings, income and cash flow, for free.

Sure, you might find a fantastic investment by looking elsewhere. So take a look at this free list of interesting companies.

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 in which 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.