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Could The Diamond Hill Investment Group, Inc. (NASDAQ:DHIL) Ownership Structure Tell Us Something Useful?

Simply Wall St

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A look at the shareholders of Diamond Hill Investment Group, Inc. (NASDAQ:DHIL) can tell us which group is most powerful. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, 'Don’t tell me what you think, tell me what you have in your portfolio.'

Diamond Hill Investment Group is not a large company by global standards. It has a market capitalization of US$489m, which means it wouldn't have the attention of many institutional investors. Taking a look at our data on the ownership groups (below), it's seems that institutions own shares in the company. We can zoom in on the different ownership groups, to learn more about DHIL.

View our latest analysis for Diamond Hill Investment Group

NasdaqGS:DHIL Ownership Summary, May 2nd 2019

What Does The Institutional Ownership Tell Us About Diamond Hill Investment Group?

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.

Diamond Hill Investment Group already has institutions on the share registry. Indeed, they own 63% of 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Diamond Hill Investment Group, (below). Of course, keep in mind that there are other factors to consider, too.

NasdaqGS:DHIL Income Statement, May 2nd 2019

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. Hedge funds don't have many shares in Diamond Hill Investment Group. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Diamond Hill Investment Group

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

I can report that insiders do own shares in Diamond Hill Investment Group, Inc.. It has a market capitalization of just US$489m, and insiders have US$38m worth of shares, in their own names. 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 29% ownership, the general public have some degree of sway over DHIL. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Diamond Hill Investment Group better, we need to consider many other factors.

I always like to check for a history of revenue growth. You can too, by accessing this free chart of historic revenue and earnings in this detailed graph.

Of course this may not be the best stock to buy. So take a peek at this free 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.