The big shareholder groups in Guaranty Federal Bancshares, Inc. (NASDAQ:GFED) have power over the company. 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.

Guaranty Federal Bancshares is a smaller company with a market capitalization of US$109m, so it may still be flying under the radar of many institutional investors. In the chart below, we can see that institutions own shares in the company. Let's take a closer look to see what the different types of shareholders can tell us about Guaranty Federal Bancshares.

View our latest analysis for Guaranty Federal Bancshares

What Does The Institutional Ownership Tell Us About Guaranty Federal Bancshares?

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 Guaranty Federal Bancshares. 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 Guaranty Federal Bancshares' historic earnings and revenue below, but keep in mind there's always more to the story.

It would appear that 9.8% of Guaranty Federal Bancshares shares are controlled by hedge funds. That's interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. Our data shows that Castle Creek Capital LLC is the largest shareholder with 21% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 9.8% and 4.1%, of the shares outstanding, respectively. Furthermore, CEO Shaun Burke is the owner of 1.5% of the company's shares.

Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 13 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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 is some analyst coverage of the stock, but it could still become more well known, with time.