Consumer Portfolio Services, Inc. (NASDAQ:CPSS) insiders have significant skin in the game with 35% ownership
Key Insights
Insiders appear to have a vested interest in Consumer Portfolio Services' growth, as seen by their sizeable ownership
54% of the business is held by the top 4 shareholders
A look at the shareholders of Consumer Portfolio Services, Inc. (NASDAQ:CPSS) can tell us which group is most powerful. We can see that individual insiders own the lion's share in the company with 35% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
With such a notable stake in the company, insiders would be highly incentivised to make value accretive decisions.
In the chart below, we zoom in on the different ownership groups of Consumer Portfolio Services.
View our latest analysis for Consumer Portfolio Services
What Does The Institutional Ownership Tell Us About Consumer Portfolio Services?
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.
Consumer Portfolio Services 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Consumer Portfolio Services' earnings history below. Of course, the future is what really matters.
Hedge funds don't have many shares in Consumer Portfolio Services. The company's largest shareholder is Black Diamond Capital Management, L.L.C., with ownership of 24%. For context, the second largest shareholder holds about 18% of the shares outstanding, followed by an ownership of 7.7% by the third-largest shareholder. Charles Bradley, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.
On looking further, we found that 54% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.
While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.
Insider Ownership Of Consumer Portfolio Services
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.
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.
It seems insiders own a significant proportion of Consumer Portfolio Services, Inc.. Insiders have a US$67m stake in this US$190m business. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.
General Public Ownership
With a 17% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Consumer Portfolio Services. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Private Equity Ownership
With an ownership of 24%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. 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.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Consumer Portfolio Services better, we need to consider many other factors. Take risks for example - Consumer Portfolio Services has 1 warning sign we think you should be aware of.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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.
