ServisFirst Bancshares, Inc. (NYSE:SFBS) is a favorite amongst institutional investors who own 69%
editorial-team@simplywallst.com (Simply Wall St)
4 min read
Key Insights
Significantly high institutional ownership implies ServisFirst Bancshares' stock price is sensitive to their trading actions
The top 11 shareholders own 52% of the company
Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business
If you want to know who really controls ServisFirst Bancshares, Inc. (NYSE:SFBS), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are institutions with 69% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
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Given the vast amount of money and research capacities at their disposal, institutional ownership tends to carry a lot of weight, especially with individual investors. Therefore, a good portion of institutional money invested in the company is usually a huge vote of confidence on its future.
Let's delve deeper into each type of owner of ServisFirst Bancshares, beginning with the chart below.
What Does The Institutional Ownership Tell Us About ServisFirst Bancshares?
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.
ServisFirst Bancshares already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 ServisFirst Bancshares' historic earnings and revenue below, but keep in mind there's always more to the story.
NYSE:SFBS Earnings and Revenue Growth October 17th 2023
Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. ServisFirst Bancshares is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is BlackRock, Inc. with 14% of shares outstanding. For context, the second largest shareholder holds about 10.0% of the shares outstanding, followed by an ownership of 6.8% by the third-largest shareholder. Furthermore, CEO Thomas Broughton is the owner of 3.0% of the company's shares.
Looking at the shareholder registry, we can see that 52% of the ownership is controlled by the top 11 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 are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of ServisFirst Bancshares
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 most recent data indicates that insiders own some shares in ServisFirst Bancshares, Inc.. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around US$281m worth of shares (at current prices). Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.
General Public Ownership
The general public-- including retail investors -- own 21% stake in the company, and hence can't easily be ignored. 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.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 2 warning signs for ServisFirst Bancshares (1 is a bit concerning!) that you should be aware of before investing here.
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.
