Institutions own 40% of Alto Ingredients, Inc. (NASDAQ:ALTO) shares but individual investors control 54% of the company
Key Insights
Significant control over Alto Ingredients by individual investors implies that the general public has more power to influence management and governance-related decisions
A total of 25 investors have a majority stake in the company with 37% ownership
A look at the shareholders of Alto Ingredients, Inc. (NASDAQ:ALTO) can tell us which group is most powerful. With 54% stake, individual investors possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
Institutions, on the other hand, account for 40% of the company's stockholders. 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 Alto Ingredients.
Check out our latest analysis for Alto Ingredients
What Does The Institutional Ownership Tell Us About Alto Ingredients?
Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.
We can see that Alto Ingredients 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 Alto Ingredients' earnings history below. Of course, the future is what really matters.
We note that hedge funds don't have a meaningful investment in Alto Ingredients. Looking at our data, we can see that the largest shareholder is The Vanguard Group, Inc. with 4.9% of shares outstanding. For context, the second largest shareholder holds about 3.1% of the shares outstanding, followed by an ownership of 2.7% by the third-largest shareholder. Additionally, the company's CEO Bryon McGregor directly holds 0.8% of the total shares outstanding.
On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.
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 is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.
Insider Ownership Of Alto Ingredients
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.
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.
We can see that insiders own shares in Alto Ingredients, Inc.. In their own names, insiders own US$9.3m worth of stock in the US$155m company. It is good to see some investment by insiders, but we usually like to see higher insider holdings. It might be worth checking if those insiders have been buying.
General Public Ownership
The general public -- including retail investors -- own 54% of Alto Ingredients. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Alto Ingredients better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Alto Ingredients , and understanding them should be part of your investment process.
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.
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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.
