The recent 19% gain must have brightened CEO Richard Hermanns' week, HireQuest, Inc.'s (NASDAQ:HQI) most bullish insider
Simply Wall St
4 min read
Key Insights
Significant insider control over HireQuest implies vested interests in company growth
The top 3 shareholders own 59% of the company
Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock
A look at the shareholders of HireQuest, Inc. (NASDAQ:HQI) can tell us which group is most powerful. The group holding the most number of shares in the company, around 45% to be precise, is individual insiders. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
As a result, insiders scored the highest last week as the company hit US$381m market cap following a 19% gain in the stock.
Let's take a closer look to see what the different types of shareholders can tell us about HireQuest.
What Does The Institutional Ownership Tell Us About HireQuest?
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.
We can see that HireQuest does have institutional investors; and they hold a good portion of the company's stock. 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 HireQuest's historic earnings and revenue below, but keep in mind there's always more to the story.
NasdaqCM:HQI Earnings and Revenue Growth June 9th 2023
We note that hedge funds don't have a meaningful investment in HireQuest. The company's CEO Richard Hermanns is the largest shareholder with 24% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 19% and 16%, of the shares outstanding, respectively.
After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.
Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
Insider Ownership Of HireQuest
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.
Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.
Our information suggests that insiders maintain a significant holding in HireQuest, Inc.. Insiders have a US$173m stake in this US$381m business. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.
General Public Ownership
With a 30% ownership, the general public, mostly comprising of individual investors, have some degree of sway over HireQuest. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.
Private Company Ownership
It seems that Private Companies own 16%, of the HireQuest stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 1 warning sign for HireQuest you should be aware of.
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.
Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
Join A Paid User Research Session You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
