Institutions profited after Arlington Asset Investment Corp.'s (NYSE:AAIC) market cap rose US$38m last week butretail investors profited the most

Key Insights

• Significant control over Arlington Asset Investment by retail investors implies that the general public has more power to influence management and governance-related decisions

• The top 25 shareholders own 41% of the company

• Institutional ownership in Arlington Asset Investment is 37%

Every investor in Arlington Asset Investment Corp. (NYSE:AAIC) should be aware of the most powerful shareholder groups. With 58% stake, retail investors possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

While retail investors were the group that benefitted the most from last week’s US$38m market cap gain, institutions too had a 37% share in those profits.

Let's take a closer look to see what the different types of shareholders can tell us about Arlington Asset Investment.

See our latest analysis for Arlington Asset Investment

ownership-breakdown

What Does The Institutional Ownership Tell Us About Arlington Asset Investment?

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.

Arlington Asset Investment already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Arlington Asset Investment, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth

We note that hedge funds don't have a meaningful investment in Arlington Asset Investment. The Vanguard Group, Inc. is currently the largest shareholder, with 6.0% of shares outstanding. Punch & Associates Investment Management, Inc. is the second largest shareholder owning 4.8% of common stock, and Barclays PLC Private Banking & Investment Banking Investment holds about 4.0% of the company stock. In addition, we found that J. Tonkel, the CEO has 3.0% of the shares allocated to their name.

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.

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 some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Arlington Asset Investment

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

Shareholders would probably be interested to learn that insiders own shares in Arlington Asset Investment Corp.. As individuals, the insiders collectively own US$5.2m worth of the US$115m company. This shows at least some alignment, but we usually like to see larger insider holdings. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 58% of Arlington Asset Investment shares. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

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. For example, we've discovered 1 warning sign for Arlington Asset Investment that you should be aware of before investing here.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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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