Individual investors account for 44% of ChromaDex Corporation's (NASDAQ:CDXC) ownership, while insiders account for 26%
Key Insights
The considerable ownership by individual investors in ChromaDex indicates that they collectively have a greater say in management and business strategy
50% of the business is held by the top 11 shareholders
Every investor in ChromaDex Corporation (NASDAQ:CDXC) should be aware of the most powerful shareholder groups. We can see that individual investors own the lion's share in the company with 44% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
And individual insiders on the other hand have a 26% ownership in the company. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time.
In the chart below, we zoom in on the different ownership groups of ChromaDex.
View our latest analysis for ChromaDex
What Does The Institutional Ownership Tell Us About ChromaDex?
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 ChromaDex 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. 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 ChromaDex's earnings history below. Of course, the future is what really matters.
ChromaDex is not owned by hedge funds. Our data shows that Ka-shing Li is the largest shareholder with 11% of shares outstanding. With 11% and 5.1% of the shares outstanding respectively, Hoi Shuen Chau and Nestlé S.A. are the second and third largest shareholders. Additionally, the company's CEO Robert Fried directly holds 2.1% of the total shares outstanding.
A closer look at our ownership figures suggests that the top 11 shareholders have a combined ownership of 50% implying that no single shareholder has a majority.
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 ChromaDex
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.
It seems insiders own a significant proportion of ChromaDex Corporation. Insiders own US$28m worth of shares in the US$107m 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
With a 44% ownership, the general public, mostly comprising of individual investors, have some degree of sway over ChromaDex. 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.
Private Company Ownership
It seems that Private Companies own 5.0%, of the ChromaDex stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.
Public Company Ownership
Public companies currently own 5.1% of ChromaDex stock. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand ChromaDex better, we need to consider many other factors. For instance, we've identified 2 warning signs for ChromaDex that you should be aware of.
But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.
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.
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