Very large capitalisation companies will have a level of shareholding by key executive's which may have been granted as part of remuneration packages. In addition companies such as Harvey Norman have large shareholdings by the founder.

While there is no general rule if it is advantageous to shareholders or prospective shareholders to have significant shareholdings by executives, many very successful investors see this as a positive sign. It means that the growth of the company and its share price will reward the key executives. This obviously then, has a positive role for the shareholders.

Top 20 Shareholders

Top 20 shareholders can be difficult to interpret as a number of shareholdings are held in nominee companies.

However, the strong representation of well respected funds is always a plus. There are certain fund managers who consistently outperform the market. If they are represented significantly it can be an indication that they are a supporter of the company and its business plan and ways of operating.

Chairman's Address

Chairman’s addresses are always carefully crafted. A good way to assess how accurate the chairman is at predicting the future success of the company is to look at the chairman’s address over a period of 3 years. This also applies to the CEO’s summary. Put simply, did the management do what they said they were going to do, or is the latest year a series of explanations of why they did not achieve what they said they would achieve last year.

Consistent over promising and under delivering is a very bad sign. Consistent over delivering and under promising is clearly a positive. Also, when the chairman and the CEO put caveats on potential growth, it is useful to attempt to assess how significant those caveats could be.