Key Insights

• Significant control over Constellation Software by individual investors implies that the general public has more power to influence management and governance-related decisions

• 36% of the business is held by the top 25 shareholders

• Recent sales by insiders

To get a sense of who is truly in control of Constellation Software Inc. (TSE:CSU), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual investors with 53% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Meanwhile, institutions make up 40% of the company’s shareholders. Insiders often own a large chunk of younger, smaller, companies while large companies tend to have institutions as shareholders.

Let’s delve deeper into each type of owner of Constellation Software, beginning with the chart below.

Check out our latest analysis for Constellation Software

What Does Institutional Ownership Tell Us About Constellation Software?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

We can see that Constellation Software 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Constellation Software, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don’t have a meaningful investment in Constellation Software. The company’s largest shareholder is FMR LLC, with ownership of 4.5%. The Vanguard Group, Inc. is the second largest shareholder owning 3.4% of common stock, and Akre Capital Management, LLC holds about 3.0% of the company stock. Furthermore, CEO Mark Leonard is the owner of 2.0% of the company’s shares.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Quite a few analysts cover the stock, so you can look into forecast growth quite easily.

Story continues

Insider Ownership Of Constellation Software

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.

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.

Shareholders would probably be interested to learn that insiders own shares in Constellation Software Inc.. The insiders have a meaningful stake worth CA$5.5b. Most would say this shows a good alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

The general public — including retail investors — own 53% of Constellation Software. This level of ownership gives investors from the wider public some power to influence key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Be aware that Constellation Software is showing 2 warning signs in our investment analysis you should know about…

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

NB: Figures in this article are calculated using data from the last twelve months, which refers 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.