U.S. markets open in 8 hours 22 minutes
  • S&P Futures

    3,796.75
    -20.00 (-0.52%)
     
  • Dow Futures

    31,135.00
    -101.00 (-0.32%)
     
  • Nasdaq Futures

    12,583.75
    -98.00 (-0.77%)
     
  • Russell 2000 Futures

    2,190.80
    -15.00 (-0.68%)
     
  • Crude Oil

    61.68
    +0.40 (+0.65%)
     
  • Gold

    1,716.60
    +0.80 (+0.05%)
     
  • Silver

    26.29
    -0.10 (-0.37%)
     
  • EUR/USD

    1.2063
    -0.0004 (-0.04%)
     
  • 10-Yr Bond

    1.4700
    0.0000 (0.00%)
     
  • Vix

    26.67
    +2.57 (+10.66%)
     
  • GBP/USD

    1.3957
    +0.0005 (+0.03%)
     
  • USD/JPY

    107.0800
    +0.0780 (+0.07%)
     
  • BTC-USD

    49,624.54
    +462.48 (+0.94%)
     
  • CMC Crypto 200

    994.94
    +7.73 (+0.78%)
     
  • FTSE 100

    6,675.47
    +61.72 (+0.93%)
     
  • Nikkei 225

    28,945.22
    -613.88 (-2.08%)
     

Could The NeoPhotonics Corporation (NYSE:NPTN) Ownership Structure Tell Us Something Useful?

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
Simply Wall St
·4 min read
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

The big shareholder groups in NeoPhotonics Corporation (NYSE:NPTN) have power over the company. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. We also tend to see lower insider ownership in companies that were previously publicly owned.

NeoPhotonics is a smaller company with a market capitalization of US$620m, so it may still be flying under the radar of many institutional investors. Our analysis of the ownership of the company, below, shows that institutional investors have bought into the company. Let's take a closer look to see what the different types of shareholders can tell us about NeoPhotonics.

Check out our latest analysis for NeoPhotonics

ownership-breakdown
ownership-breakdown

What Does The Institutional Ownership Tell Us About NeoPhotonics?

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.

We can see that NeoPhotonics does have institutional investors; and they hold a good portion of the company's stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 NeoPhotonics' historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
earnings-and-revenue-growth

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. It looks like hedge funds own 5.3% of NeoPhotonics 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. Our data shows that BlackRock, Inc. is the largest shareholder with 7.0% of shares outstanding. The Vanguard Group, Inc. is the second largest shareholder owning 7.0% of common stock, and Renaissance Technologies Corp. holds about 5.3% of the company stock. Additionally, the company's CEO Timothy Jenks directly holds 1.0% of the total shares outstanding.

After doing some more digging, we found that the top 13 have the combined ownership of 52% in the company, suggesting that no single shareholder has significant control over 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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of NeoPhotonics

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

I can report that insiders do own shares in NeoPhotonics Corporation. It has a market capitalization of just US$620m, and insiders have US$16m 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 10% ownership, the general public have some degree of sway over NeoPhotonics. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

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. Take risks for example - NeoPhotonics has 3 warning signs (and 1 which can't be ignored) we think you should know about.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.

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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.