With 58% institutional ownership, Waterstone Financial, Inc. (NASDAQ:WSBF) is a favorite amongst the big guns
Key Insights
Given the large stake in the stock by institutions, Waterstone Financial's stock price might be vulnerable to their trading decisions
A total of 11 investors have a majority stake in the company with 50% ownership
Using data from company's past performance alongside ownership research, one can better assess the future performance of a company
To get a sense of who is truly in control of Waterstone Financial, Inc. (NASDAQ:WSBF), it is important to understand the ownership structure of the business. With 58% stake, institutions possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).
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. Hence, having a considerable amount of institutional money invested in a company is often regarded as a desirable trait.
Let's take a closer look to see what the different types of shareholders can tell us about Waterstone Financial.
See our latest analysis for Waterstone Financial
What Does The Institutional Ownership Tell Us About Waterstone Financial?
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.
Waterstone Financial 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 Waterstone Financial's historic earnings and revenue below, but keep in mind there's always more to the story.
Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. It looks like hedge funds own 5.9% of Waterstone Financial shares. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. WaterStone Bank Employee Stock Ownership Plan is currently the largest shareholder, with 10% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 8.1% and 7.5%, of the shares outstanding, respectively. In addition, we found that Douglas Gordon, the CEO has 2.7% of the shares allocated to their name.
Looking at the shareholder registry, we can see that 50% 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 is some analyst coverage of the stock, but it could still become more well known, with time.
Insider Ownership Of Waterstone Financial
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.
Our most recent data indicates that insiders own some shares in Waterstone Financial, Inc.. As individuals, the insiders collectively own US$21m worth of the US$343m company. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.
General Public Ownership
With a 30% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Waterstone Financial. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.
Next Steps:
I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Be aware that Waterstone Financial is showing 2 warning signs in our investment analysis , you should know about...
But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.
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.
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