Market cap

The market capitalization of Dis-Chem Pharmacies Limited (JSE:DCP) fell by R1.1 billion last week; retail investors who hold 40% have been affected as well as institutions

A look at the shareholders of Dis-Chem Pharmacies Limited (JSE:DCP) can tell us which group is more powerful. The group with the largest number of shares in the company, around 40% to be precise, are private companies. In other words, the group is likely to gain the most (or lose the most) from its investment in the business.

While institutions that hold 34% have been under pressure after the market capitalization fell to R26b last week, private companies suffered the most losses.

In the table below, we zoom in on the different ownership groups of Dis-Chem pharmacies.

See our latest analysis for Dis-Chem Pharmacies

JSE: Distribution of DCP ownership November 18, 2022

What does institutional ownership tell us about Dis-Chem pharmacies?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

As you can see, institutional investors hold a significant share of Dis-Chem pharmacies. 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. It is not uncommon to see a sharp decline in the stock price if two large institutional investors attempt to sell a stock at the same time. It is therefore worth checking the past revenue trajectory of Dis-Chem pharmacies (below). Of course, keep in mind that there are other factors to consider as well.

earnings-and-revenue-growth
JSE: DCP Earnings and Revenue Growth November 18, 2022

Hedge funds don’t have a lot of shares in Dis-Chem Pharmacies. Our data shows that Saltzman Family Trust is the largest shareholder with 35% of shares outstanding. For context, the second shareholder owns approximately 10% of the outstanding shares, followed by a 9.7% ownership by the third shareholder.

After digging a little deeper, we found that the top 3 shareholders collectively control more than half of the company’s stock, implying that they have considerable power to influence company decisions.

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. There are a reasonable number of analysts covering the stock, so it might be useful to know their overall view on the future.

Insider Ownership of Dis-Chem Pharmacies

The definition of an insider may differ slightly from country to country, but board members still matter. The management of the company runs the company, but the CEO will answer to the board of directors, even if he is a member of it.

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.

We can see insiders holding shares in Dis-Chem Pharmacies Limited. This is a big company, so it’s good to see this level of alignment. Insiders own R1.1 billion worth of shares (at current prices). It’s good to see this level of investment by insiders. You can check here if these insiders have bought recently.

General public property

With a 15% stake, the general public, consisting mainly of individual investors, has some influence over Dis-Chem pharmacies. While that size of ownership might not be enough to sway a policy decision in their favor, they can still have a collective impact on company policies.

Private Company Ownership

We can see that private companies hold 40% of the shares issued. It’s hard to draw conclusions from this fact alone, so it’s worth investigating who owns these private companies. Sometimes insiders or other related parties have an interest in shares of a public company through a separate private company.

Next steps:

It is always useful to think about the different groups that own shares in a company. But to better understand Dis-Chem Pharmacies, we need to consider many other factors. For example, we found 1 warning sign for Dis-Chem Pharmacies which you should be aware of before investing here.

At the end of the day the future is the most important. You can access this free analyst forecast report for the company.

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 the financial statements are dated. This may not be consistent with the annual report figures for the full year.

Valuation is complex, but we help make it simple.

Find out if Pharmacies Dis-Chem is potentially overvalued or undervalued by viewing our full analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.

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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.