With 68% ownership of the shares, Financial Institutions, Inc. (NASDAQ:FISI) is heavily dominated by institutional owners

Simply Wall St

Mon, Dec 26, 2022, 7:10 AM 4 min read

Every investor in Financial Institutions, Inc. (NASDAQ:FISI) should be aware of the most powerful shareholder groups. We can see that institutions own the lion's share in the company with 68% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Given the vast amount of money and research capacities at their disposal, institutional ownership tends to carry a lot of weight, especially with individual investors. As a result, a sizeable amount of institutional money invested in a firm is generally viewed as a positive attribute.

Let's take a closer look to see what the different types of shareholders can tell us about Financial Institutions.

View our latest analysis for Financial Institutions

ownership-breakdown — NasdaqGS:FISI Ownership Breakdown December 26th 2022

What Does The Institutional Ownership Tell Us About Financial Institutions?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

Financial Institutions already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Financial Institutions' historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth — NasdaqGS:FISI Earnings and Revenue Growth December 26th 2022

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Financial Institutions is not owned by hedge funds. Dimensional Fund Advisors LP is currently the company's largest shareholder with 8.2% of shares outstanding. BlackRock, Inc. is the second largest shareholder owning 8.0% of common stock, and The Vanguard Group, Inc. holds about 4.9% of the company stock. In addition, we found that Martin Birmingham, the CEO has 0.8% of the shares allocated to their name.

After doing some more digging, we found that the top 19 have the combined ownership of 51% in the company, suggesting that no single shareholder has significant control over the company.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Financial Institutions

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

We can see that insiders own shares in Financial Institutions, Inc.. As individuals, the insiders collectively own US$9.1m worth of the US$376m company. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public-- including retail investors -- own 30% stake in the company, and hence can't easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we've identified 1 warning sign for Financial Institutions that you should be aware of.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here

Terms and Privacy Policy

Your Privacy Choices

Utah Privacy Notice

More Info