Key Insights

• Significantly high institutional ownership implies Applied Optoelectronics' stock price is sensitive to their trading actions

• A total of 21 investors have a majority stake in the company with 51% ownership

• Insiders have sold recently

A look at the shareholders of Applied Optoelectronics, Inc. (NASDAQ:AAOI) can tell us which group is most powerful. The group holding the most number of shares in the company, around 68% to be precise, is institutions. Put another way, the group faces the maximum upside potential (or downside risk).

No shareholder likes losing money on their investments, especially institutional investors who saw their holdings drop 4.6% in value last week. However, the 109% one-year return to shareholders might have softened the blow. We would assume however, that they would be on the lookout for weakness in the future.

Let's delve deeper into each type of owner of Applied Optoelectronics, beginning with the chart below.

View our latest analysis for Applied Optoelectronics

What Does The Institutional Ownership Tell Us About Applied Optoelectronics?

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.

We can see that Applied Optoelectronics does have institutional investors; and they hold a good portion of the company's stock. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Applied Optoelectronics' earnings history below. Of course, the future is what really matters.

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Applied Optoelectronics is not owned by hedge funds. The company's largest shareholder is BlackRock, Inc., with ownership of 6.7%. Meanwhile, the second and third largest shareholders, hold 4.9% and 3.5%, of the shares outstanding, respectively. Furthermore, CEO Chih-Hsiang Lin is the owner of 2.1% of the company's shares.

A closer look at our ownership figures suggests that the top 21 shareholders have a combined ownership of 51% implying that no single shareholder has a majority.

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 are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.