Institutions own 44% of Big 5 Sporting Goods Corporation (NASDAQ:BGFV) shares but retail investors control 51% of the company
Key Insights
The considerable ownership by retail investors in Big 5 Sporting Goods indicates that they collectively have a greater say in management and business strategy
A total of 25 investors have a majority stake in the company with 42% ownership
Every investor in Big 5 Sporting Goods Corporation (NASDAQ:BGFV) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 51% to be precise, is retail investors. 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 44% of the company's stockholders. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies.
In the chart below, we zoom in on the different ownership groups of Big 5 Sporting Goods.
Check out our latest analysis for Big 5 Sporting Goods
What Does The Institutional Ownership Tell Us About Big 5 Sporting Goods?
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 Big 5 Sporting Goods 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. 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 Big 5 Sporting Goods' historic earnings and revenue below, but keep in mind there's always more to the story.
Big 5 Sporting Goods is not owned by hedge funds. Our data shows that BlackRock, Inc. is the largest shareholder with 6.5% of shares outstanding. The Vanguard Group, Inc. is the second largest shareholder owning 5.1% of common stock, and Dimensional Fund Advisors LP holds about 4.2% of the company stock. Additionally, the company's CEO Steven Miller directly holds 2.7% of the total shares outstanding.
A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where 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 is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.
Insider Ownership Of Big 5 Sporting Goods
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.
Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.
Our most recent data indicates that insiders own some shares in Big 5 Sporting Goods Corporation. It has a market capitalization of just US$209m, and insiders have US$8.8m worth of shares, in their own names. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.
General Public Ownership
The general public -- including retail investors -- own 51% of Big 5 Sporting Goods. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Big 5 Sporting Goods (at least 1 which can't be ignored) , 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.
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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