Retail investors who have a significant stake must be disappointed along with institutions after Inseego Corp.'s (NASDAQ:INSG) market cap dropped by US$58m
Every investor in Inseego Corp. (NASDAQ:INSG) should be aware of the most powerful shareholder groups. With 56% stake, retail investors possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).
While the holdings of retail investors took a hit after last week’s 28% price drop, institutions with their 26% holdings also suffered.
Let's delve deeper into each type of owner of Inseego, beginning with the chart below.
NasdaqGS:INSG Ownership Breakdown November 15th 2024
What Does The Institutional Ownership Tell Us About Inseego?
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.
Inseego already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Inseego's historic earnings and revenue below, but keep in mind there's always more to the story.
NasdaqGS:INSG Earnings and Revenue Growth November 15th 2024
We note that hedge funds don't have a meaningful investment in Inseego. Tavistock Life Sciences is currently the company's largest shareholder with 11% of shares outstanding. The second and third largest shareholders are Braslyn Ltd and Simplicity Wealth LLC, with an equal amount of shares to their name at 6.2%.
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 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 are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of Inseego
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.
We can see that insiders own shares in Inseego Corp.. It has a market capitalization of just US$133m, and insiders have US$2.6m worth of shares, in their own names. It is good to see some investment by insiders, but we usually like to see higher insider holdings. It might be worth checking if those insiders have been buying.
General Public Ownership
The general public, mostly comprising of individual investors, collectively holds 56% of Inseego shares. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.
Private Equity Ownership
With a stake of 11%, private equity firms could influence the Inseego board. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.
Private Company Ownership
Our data indicates that Private Companies hold 5.0%, of the company's shares. 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:
It's always worth thinking about the different groups who own shares in a company. But to understand Inseego better, we need to consider many other factors. Take risks for example - Inseego has 4 warning signs (and 2 which are a bit unpleasant) we think you should know about.
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.
