In This Article:
The big shareholder groups in Compass Diversified (NYSE:CODI) have power over the company. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. Companies that used to be publicly owned tend to have lower insider ownership.
With a market capitalization of US$1.3b, Compass Diversified is a decent size, so it is probably on the radar of institutional investors. Taking a look at our data on the ownership groups (below), it seems that institutions are noticeable on the share registry. Let's take a closer look to see what the different types of shareholders can tell us about Compass Diversified.
See our latest analysis for Compass Diversified
What Does The Institutional Ownership Tell Us About Compass Diversified?
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 Compass Diversified. 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 Compass Diversified's historic earnings and revenue below, but keep in mind there's always more to the story.
It looks like hedge funds own 13% of Compass Diversified shares. 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. Compass Group Investments, Inc is currently the largest shareholder, with 13% of shares outstanding. American Century Investment Management Inc. is the second largest shareholder owning 6.2% of common stock, and City National Rochdale, LLC holds about 4.3% of the company stock. Furthermore, CEO Elias Sabo is the owner of 0.9% of the company's shares.
A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where 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.