Every investor in Virgin Money UK PLC (LON:VMUK) should know the most powerful shareholder groups. We can see that institutions hold the lion’s share of the business with 53% ownership. In other words, the group faces the maximum upside potential (or downside risk).
Last week’s £73m market capitalization gain would likely be appreciated by institutional investors, especially after a year of 34% losses.
In the table below we zoom in on the different ownership groups of Virgin Money UK.
Our analysis indicates that VMUK is potentially undervalued!
What does institutional ownership tell us about Virgin Money UK?
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 sizeable share of Virgin Money UK. This suggests some credibility with professional investors. But we cannot rely solely on this fact since institutions sometimes make bad investments, like everyone else. When multiple institutions hold a stock, there is always a risk that they are in a “crowded trade”. When such a transaction goes wrong, multiple parties may compete to quickly sell shares. This risk is higher in a company with no history of growth. You can see Virgin Money UK’s earnings and historical earnings below, but keep in mind there’s always more to tell.
Institutional investors own more than 50% of the company, so together they can probably heavily influence board decisions. Hedge funds don’t have a lot of shares in Virgin Money UK. Virgin Group Holdings Limited is currently the company’s largest shareholder with 13% of the shares outstanding. For context, the second shareholder owns approximately 10% of the outstanding shares, followed by a 5.2% ownership by the third shareholder.
We dug a little deeper and found that 9 of the major shareholders make up around 50% of the register, implying that along with the large shareholders, there are a few smaller shareholders, thus balancing everyone’s interests somewhat.
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. A number of analysts cover the stock, so you can look at growth forecasts quite easily.
Insider ownership of Virgin Money UK
The definition of company insiders can be subjective and varies from jurisdiction to jurisdiction. Our data reflects individual insiders, capturing at least board members. 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.
Our data suggests that insiders hold less than 1% of Virgin Money UK PLC in their own name. We note, however, that insiders may have an indirect interest through a private company or other corporate structure. This is a fairly large company, so it would be possible for board members to hold a significant stake in the company, without holding much proportional interest. In this case, they hold around £3.3m worth of shares (at current prices). It’s good to see board members owning stock, but it can be helpful to check whether those insiders have bought.
General public property
With a 32% stake, the general public, made up mainly of individual investors, has some influence over Virgin Money UK. 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
Our data indicates that private companies own 14% of the company’s shares. It might be worth exploring this further. If related parties, such as insiders, have an interest in any of these private companies, this should be disclosed in the annual report. Private companies may also have a strategic interest in the company.
While it is worth considering the different groups that own a business, there are other, even more important factors. To this end, you should be aware of the 1 warning sign we spotted with Virgin Money UK.
But finally it’s the future, not the past, which will determine the performance of the owners of this company. Therefore, we think it’s advisable to take a look at this free report showing whether analysts are predicting a brighter future.
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 Virgin Money United Kingdom 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.