Retail shareholders - a very small bunch

[RichKid]

Interesting figures. We always hear of how more and more average Australians hold shares (whether direct or indirect), this study provides some detail to consider.

Retail share investors in tiny minority
October 18, 2005 http://www.smh.com.au/news/Business...n-tiny-minority/2005/10/18/1129401251072.html

More Australians might be trading shares, but new research shows retail investors still own only a fraction of most major listed companies.

And the shareholdings of so-called "mum and dad" investors are heavily skewed towards the telecommunications sector and Telstra in particular.

A study released by the Australasian Investor Relations Association (AIRA) found retail investors still hold a very low percentage of stock.

Coming as the annual general meeting season (AGM) shifts into gear, AIRA chief executive Ian Matheson said the findings had big implications for investor relations.

Using data from the annual reports of 198 companies listed on the ASX300 index between 2001 and 2004, the group found that investors holding 1,000 shares or less made up 31 per cent of shareholders, but owned just three per cent of the top 300 companies.

Yet 68.5 per cent of the market was owned by institutional investors, or those with 100,000 shares or more, who made up just 1.5 per cent of all shareholders.

"While there is a large number of retail holders, the percentage of stock held by these investors is very small," the report said.

Study co-author Dr Carole Comerton-Forde, of the University of Sydney's School of Business, said retail investors - defined in the report as those owning less than 10,000 shares - accounted for roughly 85 per cent of shareholders in the top 300 companies.

However, they owned less than 20 per cent of shares on issue.

"So (there's) a very large number of shareholders ... owning only quite a small fraction of the shares on issue," Dr Comerton-Forde said.

She said the number of retail investors was also disproportionately high in the telecommunications sector, with more than 70 per cent of shareholders holding less than 1,000 shares.

"A disproportionate number of retail shareholders own stock in the telecommunications industry," she said.

"This is driven by shareholdings in Telstra."

Mr Matheson, whose organisation represents 74 publicly-listed companies, said the findings would be valuable to companies which faced a growing tension between the demands of retail and institutional investors.

"Companies are looking to benchmark their ownership base against their peers and other companies," he said.

"What this is suggesting, and I think many companies have known (this) for a long time, is that the shareholders present at the meeting (the AGM) typically represent a very small percentage of the shares on issue of their company."

He said the results had big implications for how companies handled different segments of their shareholder base on an ongoing basis.

 

[Julia]

Re: Retail shareholders- a very small bunch

I'm not at all surprised by this, Rich. I doubt that too many of the aforementioned Telstra small investors will be repeating their purchasing experience if T3 ever goes out to the market!

Whenever I hear that expression" "mums and dads investors", I feel quite nauseous. All I can see is Peter Costello's smirking visage, and his patronising tone.

(Before anyone jumps on me about being anti-government, I'm not at all. Happen to be a supporter of the current government and the way it has improved conditions for business and investing in general. Just have a dislike of supercilious, patronising politicians).

Sorry if I've veered slightly off the thread.

Julia

PS
Just had a further thought: I guess the above figures don't take into account the considerable quantities of shares owned indirectly by Australian individuals through their super funds, as these would be classified under Institutional Investors?

 

[RichKid]

Re: Retail shareholders- a very small bunch

I'm not at all surprised by this, Rich. I doubt that too many of the aforementioned Telstra small investors will be repeating their purchasing experience if T3 ever goes out to the market!
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Just had a further thought: I guess the above figures don't take into account the considerable quantities of shares owned indirectly by Australian individuals through their super funds, as these would be classified under Institutional Investors?

Hi Julia,
Yep, it looks bad but then most small investors are a bit easier to con since they aren't that sophisticated- emotion rather than maths. Quite a few would have held TLS since they first bought and just satisfied themselves with the divs- bottom drawer stuff.

Indirect holdings are what we normally see quoted in the media, all the super fund stock that individuals can't really control. That's one reason why volume is important on charts, even if a few thousand mums and dads sell out of a stock it may be nothing compared to one insto dumping a small percentage of their holding.

 

[RodC]

Re: Retail shareholders- a very small bunch

I agree Julia,

I hate the term "mum and dad investors". I consider it derogatory.

Rod.

 

[markrmau]

Re: Retail shareholders- a very small bunch

About telstra....

I remember a year ago when banks were out of favour, margin squeeze etc. The instos were all getting out, and mum & dads jumping in.

Very nice recovery in banks as it turns out. The M&D investors may just be right about telstra at around $4.