Independent Bank Group, Inc.'s (NASDAQ:IBTX) latest 3.5% decline adds to one-year losses, institutional investors may consider drastic measures
Key Insights
Institutions' substantial holdings in Independent Bank Group implies that they have significant influence over the company's share price
52% of the business is held by the top 6 shareholders
To get a sense of who is truly in control of Independent Bank Group, Inc. (NASDAQ:IBTX), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are institutions with 76% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
And so it follows that institutional investors was the group most impacted after the company's market cap fell to US$1.8b last week after a 3.5% drop in the share price. This set of investors may especially be concerned about the current loss, which adds to a one-year loss of 38% for shareholders. Also referred to as "smart money", institutions have a lot of sway over how a stock's price moves. As a result, if the downtrend continues, institutions may face pressures to sell Independent Bank Group, which might have negative implications on individual investors.
Let's take a closer look to see what the different types of shareholders can tell us about Independent Bank Group.
View our latest analysis for Independent Bank Group
What Does The Institutional Ownership Tell Us About Independent Bank Group?
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.
As you can see, institutional investors have a fair amount of stake in Independent Bank Group. 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 Independent Bank Group's earnings history below. Of course, the future is what really matters.
Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. We note that hedge funds don't have a meaningful investment in Independent Bank Group. The company's largest shareholder is BlackRock, Inc., with ownership of 14%. With 10% and 9.9% of the shares outstanding respectively, The Vanguard Group, Inc. and Vincent Viola are the second and third largest shareholders. In addition, we found that David Brooks, the CEO has 1.6% of the shares allocated to their name.
We also observed that the top 6 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.
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 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 Independent Bank Group
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.
Our most recent data indicates that insiders own a reasonable proportion of Independent Bank Group, Inc.. It has a market capitalization of just US$1.8b, and insiders have US$235m worth of shares in their own names. That's quite significant. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.
General Public Ownership
The general public, who are usually individual investors, hold a 10% stake in Independent Bank Group. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important.
I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow, for free.
If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.
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.
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