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Breaking Down Wilhelmina International Inc’s (WHLM) Ownership Structure

In this article, I will take a quick look at Wilhelmina International Inc’s (NASDAQ:WHLM) recent ownership structure – an unconventional investing subject, but an important one. Ownership structure of a company has been found to affect share performance over time. Differences in ownership structure of companies can have a profound effect on how management’s incentives are aligned with shareholder returns, which is why we’ll take a moment to analyse XYZ’s shareholder registry. All data provided is as of the most recent financial year end.

See our latest analysis for WHLM

NasdaqCM:WHLM Ownership Summary Nov 7th 17
NasdaqCM:WHLM Ownership Summary Nov 7th 17

Institutional Ownership

Due to the big order sizes of institutional investors, a company’s shares can experience large, one-sided momentum, driven by high volume of shares removed from, or injected into, the market. WHLM hardly has any institutional ownership, leaving investors little to think about sharp volatility in the stock that could take place due to institutional trading. But investors should also check whether hedge funds, mostly active investors with a short-term horizon, have a significant stake. They own 50.85% of WHLM’s outstanding shares, enough to cause a spike in volatility, at least in the short-term. However, I would explore its ownership registry in more detail to check how other ownership types affect its investment case for the long-term investor.

Insider Ownership

I find insiders are another important group of stakeholders, who are directly involved in making key decisions related to the use of capital. In essence, insider ownership is more about the alignment of shareholders’ interests with the management. A major group of owners of WHLM is individual insiders, sitting with a hefty 35.09% stake in the company. Broadly, insider ownership of this level has been found to negatively affect companies with consistently low PE ratio (underperforming). And a positive impact has been seen on companies with a high PE ratio (outperforming). It may be interesting to take a look at what company insiders have been doing with their holdings lately. Insider buying may be a sign of upbeat future expectations, however, selling doesn’t necessarily mean the opposite as insiders may be motivated by their personal financial needs.

NasdaqCM:WHLM Insider Trading Nov 7th 17
NasdaqCM:WHLM Insider Trading Nov 7th 17

General Public Ownership

A big stake of 13.54% in WHLM is held by the general public. With this size of ownership, retail investors can collectively play a role in major company policies that affect shareholders returns, including executive remuneration and the appointment of directors. They can also exercise the power to decline an acquisition or merger that may not improve profitability.

What this means for you:

Are you a shareholder? While institutional ownership in WHLM is low, active hedge funds still have a significant stake in the company. The participation of these active investors has been linked to the volatile nature of share prices. It is important that WHLM offers enough margin of safety in order to avoid a significant portfolio impact resulting from a sustained sell-off and drop in share value. If you’re interested in bolstering your portfolio with new stocks and are looking for ideas, take a look at our free app to see my list of stocks with a strong growth potential.

Are you a potential investor? Ownership structure should not be the only focus of your research when constructing an investment thesis around WHLM. Rather, you should be looking at fundamental drivers like the future growth expectations around WHLM, which is a key factor that will influence WHLM’s share value. Take a look at our most recent infographic report on WHLM for a more in-depth analysis of these factors to help you make a more well-informed investment decision.

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.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.

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