Institutional investors control 54% of Gulf Island Fabrication, Inc. (NASDAQ:GIFI) and were rewarded last week after stock increased 30%
Key Insights
Given the large stake in the stock by institutions, Gulf Island Fabrication's stock price might be vulnerable to their trading decisions
51% of the business is held by the top 6 shareholders
Every investor in Gulf Island Fabrication, Inc. (NASDAQ:GIFI) should be aware of the most powerful shareholder groups. We can see that institutions own the lion's share in the company with 54% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
And things are looking up for institutional investors after the company gained US$25m in market cap last week. One-year return to shareholders is currently 55% and last week’s gain was the icing on the cake.
In the chart below, we zoom in on the different ownership groups of Gulf Island Fabrication.
View our latest analysis for Gulf Island Fabrication
What Does The Institutional Ownership Tell Us About Gulf Island Fabrication?
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.
As you can see, institutional investors have a fair amount of stake in Gulf Island Fabrication. 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 Gulf Island Fabrication'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. Our data indicates that hedge funds own 5.3% of Gulf Island Fabrication. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Wax Asset Management, LLC is currently the largest shareholder, with 14% of shares outstanding. The second and third largest shareholders are Robert Averick and Kokino LLC, with an equal amount of shares to their name at 11%. Furthermore, CEO Richard Heo is the owner of 3.3% of the company's shares.
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.
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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.
Insider Ownership Of Gulf Island Fabrication
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.
It seems insiders own a significant proportion of Gulf Island Fabrication, Inc.. Insiders own US$20m 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
The general public-- including retail investors -- own 22% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should be aware of the 1 warning sign we've spotted with Gulf Island Fabrication .
Ultimately the future is most important. You can access this free report on analyst forecasts for the company.
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.
