Public companies represent 46% of the ownership of Magic Software Enterprises Ltd. (NASDAQ: MGIC), while individual investors represent 28%

ByLance T. Lee

Sep 11, 2022

To get an idea of ​​who actually controls Magic Software Enterprises Ltd. (NASDAQ: MGIC), it is important to understand the ownership structure of the business. The group with the largest number of shares in the company, around 46% to be precise, are the public companies. That is, the group will benefit the most if the stock goes up (or lose the most if there is a downturn).

And individual investors, on the other hand, hold a 28% stake in the company.

Let’s dive deeper into each Magic Software Enterprises owner type, starting with the table below.

Check out our latest analysis for Magic Software Enterprises

distribution of property

What does institutional ownership tell us about Magic Software Enterprises?

Institutional investors typically compare their own returns to the returns of a commonly tracked index. They therefore generally consider buying larger companies that are included in the relevant benchmark.

We can see that Magic Software Enterprises has institutional investors; and they own a good part of the shares of the company. 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 Magic Software Enterprises revenue and historical revenue below, but keep in mind there’s always more to tell.

earnings-and-revenue-growth

earnings-and-revenue-growth

Hedge funds don’t have a lot of shares in Magic Software Enterprises. Looking at our data, we can see that the largest shareholder is Formula Systems (1985) Ltd. with 46% of the shares outstanding. For context, the second shareholder owns approximately 5.1% of the outstanding shares, followed by a 4.9% ownership by the third shareholder.

A more detailed study of the shareholder register showed us that 2 of the main shareholders hold a considerable stake in the company, via their 51% stake.

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. Although there is some analyst coverage, the company is probably not widely covered. So it could attract more attention, on the track.

Magic Software Enterprises Insider Property

The definition of an insider may differ slightly from country to country, but board members still matter. The management of the company answers to the board of directors and the latter must represent the interests of the shareholders. In particular, sometimes the senior executives themselves sit on the board of directors.

I generally consider insider ownership to be a good thing. However, there are times when it is more difficult for other shareholders to hold the board accountable for decisions.

Our information suggests that insiders at Magic Software Enterprises Ltd. hold less than 1% of the company. It appears that board members hold no more than $4.0 million of stock in the $825 million company. We generally like to see a more invested board. However it may be worth checking if these insiders bought.

General public property

The general public, who are usually individual investors, hold a 28% stake in Magic Software Enterprises. This size of ownership, although considerable, may not be sufficient to change company policy if the decision is not in line with other major shareholders.

Ownership of a public company

Public companies currently own 46% of the shares of Magic Software Enterprises. It may be a strategic interest and both companies may have related business interests. They may have separated. This exploitation probably deserves further investigation.

Next steps:

I find it very interesting to see who exactly owns a company. But to really get insight, we also need to consider other information. For example, we found 1 warning sign for Magic Software Enterprises which you should be aware of before investing here.

But finally it’s the future, not the past, which will determine the performance of the owners of this company. That’s why we think it’s advisable to take a look at this free report showing whether analysts are predicting a better 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.

Feedback on this article? Concerned about content? Get in touch with us directly. You can also email the editorial team (at) Simplywallst.com.

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.

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