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How to use Promoter Shareholding in Stock’s Fundamental Analysis?
Why should I worry about Promoter Shareholding?
If you have tried learning fundamental analysis, either via online courses, books, or YouTube videos, you would have come across the term Promoter Shareholding. Promoter shareholding is the percentage of shares held by the promoters (or founders) of the company. Typically, the advise you get is, higher the promoter shareholding, the better it is. This is true, and also not true in some cases. In this post, I will cover all the hidden stories promoter shareholding tells you, and how you can use this metric while picking stocks. Lets get started.
When High Promoter Shareholding is Good
High promoter shareholding means that the wealth of the promoters is tied with the company. If the company performs well, its revenue and profits will increase. This will increase the company’s stock price. Stock price increase will create wealth for the promoters, and retail investors like us. Therefore, high promoter shareholding is also called as promoters having ‘skin in the game’.
