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A look at the shareholders of Digimarc Corporation (NASDAQ:DMRC) can tell us which group is most powerful. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies. I quite like to see at least a little bit of insider ownership. As Charlie Munger said 'Show me the incentive and I will show you the outcome.
Digimarc is a smaller company with a market capitalization of US$712m, so it may still be flying under the radar of many institutional investors. Our analysis of the ownership of the company, below, shows that institutions are noticeable on the share registry. We can zoom in on the different ownership groups, to learn more about Digimarc.
See our latest analysis for Digimarc
What Does The Institutional Ownership Tell Us About Digimarc?
Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.
As you can see, institutional investors have a fair amount of stake in Digimarc. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Digimarc's historic earnings and revenue below, but keep in mind there's always more to the story.
Our data indicates that hedge funds own 5.9% of Digimarc. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Riley Mccormack is currently the largest shareholder, with 23% of shares outstanding. With 5.9% and 5.2% of the shares outstanding respectively, Senvest Management, LLC and BlackRock, Inc. are the second and third largest shareholders.
On further inspection, we found that more than half the company's shares are owned by the top 8 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.
While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There is some analyst coverage of the stock, but it could still become more well known, with time.