Institutions' substantial holdings in CommScope Holding Company implies that they have significant influence over the company's share price
A total of 11 investors have a majority stake in the company with 51% ownership
If you want to know who really controls CommScope Holding Company, Inc. (NASDAQ:COMM), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are institutions with 77% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
Institutional investors would probably welcome last week's 12% increase in share prices after a year of 64% losses as a sign that returns are likely to begin trending higher.
Let's delve deeper into each type of owner of CommScope Holding Company, beginning with the chart below.
What Does The Institutional Ownership Tell Us About CommScope Holding Company?
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.
CommScope Holding Company already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 CommScope Holding Company's historic earnings and revenue below, but keep in mind there's always more to the story.
Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. It would appear that 9.8% of CommScope Holding Company shares are controlled by hedge funds. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. The Vanguard Group, Inc. is currently the company's largest shareholder with 14% of shares outstanding. For context, the second largest shareholder holds about 9.8% of the shares outstanding, followed by an ownership of 7.8% by the third-largest shareholder.
A closer look at our ownership figures suggests that the top 11 shareholders have a combined ownership of 51% implying that no single shareholder has a majority.
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 are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
Insider Ownership Of CommScope Holding Company
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.
Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.
Our most recent data indicates that insiders own some shares in CommScope Holding Company, Inc.. As individuals, the insiders collectively own US$21m worth of the US$824m company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public, who are usually individual investors, hold a 11% stake in CommScope Holding Company. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
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. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with CommScope Holding Company (at least 1 which can't be ignored) , and understanding them should be part of your investment process.
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.
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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.