In the wake of CI Financial Corp.’s (TSE:CIX) latest CA$113m market cap drop, institutional owners may be forced to take severe actions

Important Findings

  • Given the large holdings of institutions in the stock, CI Financial’s stock price could be vulnerable to their trading decisions
  • 44% of the company is held by the 25 largest shareholders
  • Insiders recently bought

If you want to know who CI Financial Corp. (TSE:CIX) really controls, then you need to look at the composition of the share register. We can see that institutions own the lion’s share of the company at 46%. In other words, the group will gain the most (or lose the most) from their investment in the company.

And institutional investors suffered the heaviest losses after the company’s share price fell 4.5% last week. The recent loss, which adds to a 33% year-on-year loss for shareholders, may not sit well with this group of investors. Institutions, often referred to as “market makers,” wield significant power in influencing the price momentum of any stock. Therefore, should CI Financial’s stock price continue to be weak, institutional investors may feel compelled to sell the stock, which may not be ideal for retail investors.

Let’s dive deeper into each CI Financial owner type, starting with the table below.

Check out our latest analysis for CI Financial

TSX:CIX ownership breakdown March 21, 2023

What Does Institutional Ownership Tell Us About CI Financial?

Institutional investors typically compare their own returns to the returns of a commonly tracked index. As such, they typically consider buying larger companies that are included in the relevant benchmark index.

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We can see that CI Financial has institutional investors; and they hold a good portion of the company’s stock. This means that the analysts who work for these institutes have looked at the stock and like it. But just like everyone else, they can be wrong. When multiple institutions own a stock, there is always a risk that they will find themselves in a “crowded trade”. When such a trade goes awry, multiple parties can compete to sell shares quickly. This risk is higher in a company without a growth history. You can see CI Financial’s historical earnings and earnings below, but remember there’s still more to be told.

TSX:CIX Earnings and Revenue Growth March 21, 2023

We find that hedge funds have no meaningful investment in CI Financial. William Holland is currently the company’s largest shareholder with 5.4% of outstanding shares. Meanwhile, the second- and third-largest shareholders hold 5.3% and 3.5% of the outstanding shares, respectively.

Our studies suggest that the top 25 shareholders collectively control less than half of the company’s stock, meaning the company’s stock is widely dispersed and there is no dominant shareholder.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiment to know which way the wind is blowing. There are a fair number of analysts covering the stock, so it might be helpful to get their overall view on the future.

Insider ownership of CI Financial

While the precise definition of an insider can be subjective, almost everyone considers a board member to be an insider. The management of the company is accountable to the board of directors, which should represent the interests of the shareholders. It is noteworthy that sometimes high-ranking managers themselves sit on the board.

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Insider ownership is positive when it signals leadership thinks like the true owners of the company. However, a high proportion of insiders can give immense power to even a small group within the organization. This can sometimes be negative.

Our latest data shows that insiders are buying some CI Financial Corp. shares. own. It’s a fairly large company, so seeing a potentially meaningful direction is generally positive. In this case, they own around $157 million worth of stock (at current prices). If you’re interested in investigating insider targeting, you can click here to see if insiders bought or sold.

General Public Property

The general public — including retail investors — own 42% of the shares in the company, so it can’t be easily ignored. While this ownership may not be sufficient to sway a policy decision in their favor, they can still collectively influence company policy.

Private company property

Our data shows that private companies own 5.3% of the company’s shares. It might be worth looking into in more detail. If related parties, such as insiders, have interests in any of these private companies, this should be disclosed in the annual report. Private companies can also have a strategic interest in the company.

Next Steps:

I find it very interesting to see who exactly owns a company. But to really gain insight, we need to consider other information as well. Case in point: We discovered it 3 warning signs for CI Financial They should be aware and one of them should not be ignored.

Ultimately the future is the most important thing. You can access it free Report on analysts forecasts for the company.

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Note: The figures in this article are calculated using data for the last twelve months, relating to the 12-month period ending on the last date of the month to which the financial statements are dated. This may not tally with the annual report figures for the full year.

The assessment is complex, but we help to simplify it.

Find out if CI Financial may be over or undervalued by reviewing our comprehensive analysis which includes the following Fair Value Estimates, Risks and Warnings, Dividends, Insider Trading and Financial Health.

Check out the free analysis

This Simply Wall St article is of a general nature. We provide comments based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock and does not take into account your goals or financial situation. Our goal is to offer you long-term focused analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.


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