Key Insights

• Significant control over ArcelorMittal South Africa by public companies implies that the general public has more power to influence management and governance-related decisions
• 69% of the company is held by a single shareholder (ArcelorMittal S.A.)
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

A look at the shareholders of ArcelorMittal South Africa Limited (JSE:ACL) can tell us which group is most powerful. With 69% stake, public companies possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, public companies as a group endured the highest losses last week after market cap fell by R446m.

Let’s delve deeper into each type of owner of ArcelorMittal South Africa, beginning with the chart below.

See our latest analysis for ArcelorMittal South Africa

What Does The Lack Of Institutional Ownership Tell Us About ArcelorMittal South Africa?

We don’t tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it’s not particularly common.

There are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. On the other hand, it’s always possible that professional investors are avoiding a company because they don’t think it’s the best place for their money. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of ArcelorMittal South Africa, for yourself, below.

We note that hedge funds don’t have a meaningful investment in ArcelorMittal South Africa. Looking at our data, we can see that the largest shareholder is ArcelorMittal S.A. with 69% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. With 8.3% and 6.2% of the shares outstanding respectively, The Industrial Development Corporation of South Africa Limited and Noluthando Gosa are the second and third largest shareholders. Noluthando Gosa, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of ArcelorMittal South Africa

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. 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.

Our most recent data indicates that insiders own some shares in ArcelorMittal South Africa Limited. It has a market capitalization of just R3.9b, and insiders have R240m worth of shares, in their own names. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 15% stake in ArcelorMittal South Africa. While this group can’t necessarily call the shots, it can certainly have a real influence on how the company is run.

Public Company Ownership

Public companies currently own 69% of ArcelorMittal South Africa stock. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should learn about the 2 warning signs we’ve spotted with ArcelorMittal South Africa (including 1 which makes us a bit uncomfortable) .

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 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.