GSI Technology, Inc.'s (NASDAQ:GSIT) market cap rose US$25m last week; retail investors who hold 53% profited and so did insiders
Key Insights
GSI Technology's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
The top 25 shareholders own 46% of the company
Every investor in GSI Technology, Inc. (NASDAQ:GSIT) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are retail investors with 53% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
Following a 28% increase in the stock price last week, retail investors profited the most, but insiders who own 30% stock also stood to gain from the increase.
In the chart below, we zoom in on the different ownership groups of GSI Technology.
Check out our latest analysis for GSI Technology
What Does The Institutional Ownership Tell Us About GSI Technology?
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.
GSI Technology already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 GSI Technology's earnings history below. Of course, the future is what really matters.
Hedge funds don't have many shares in GSI Technology. The company's CEO Lee-Lean Shu is the largest shareholder with 10.0% of shares outstanding. Jing-Rong Tang is the second largest shareholder owning 5.8% of common stock, and Ching-Ho Cheng holds about 4.3% of the company stock.
Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.
Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. 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 GSI Technology
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.
Our most recent data indicates that insiders own a reasonable proportion of GSI Technology, Inc.. Insiders own US$35m worth of shares in the US$116m company. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.
General Public Ownership
The general public, who are usually individual investors, hold a substantial 53% stake in GSI Technology, suggesting it is a fairly popular stock. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.
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. Be aware that GSI Technology is showing 3 warning signs in our investment analysis , and 1 of those is a bit unpleasant...
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
