Following recent decline, Virco Mfg. Corporation's (NASDAQ:VIRC) top shareholder CEO Robert Virtue sees holdings value drop by 20%

editorial-team@simplywallst.com (Simply Wall St)

Thu, Aug 8, 2024, 6:08 AM 4 min read

Every investor in Virco Mfg. Corporation (NASDAQ:VIRC) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 42% to be precise, is individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).

And following last week's 20% decline in share price, insiders suffered the most losses.

In the chart below, we zoom in on the different ownership groups of Virco Mfg.

View our latest analysis for Virco Mfg

ownership-breakdown — NasdaqGM:VIRC Ownership Breakdown August 8th 2024

What Does The Institutional Ownership Tell Us About Virco Mfg?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

As you can see, institutional investors have a fair amount of stake in Virco Mfg. 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 Virco Mfg's historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth — NasdaqGM:VIRC Earnings and Revenue Growth August 8th 2024

Virco Mfg is not owned by hedge funds. With a 19% stake, CEO Robert Virtue is the largest shareholder. In comparison, the second and third largest shareholders hold about 8.5% and 6.9% of the stock.

We also observed that the top 7 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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 a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Virco Mfg

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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.

Our most recent data indicates that insiders own a reasonable proportion of Virco Mfg. Corporation. It has a market capitalization of just US$232m, and insiders have US$98m worth of shares in their own names. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 23% 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 example, we've discovered 1 warning sign for Virco Mfg that you should be aware of before investing here.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.

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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.