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The big shareholder groups in Globalstar, Inc. (NYSEMKT:GSAT) have power over the company. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, 'Don’t tell me what you think, tell me what you have in your portfolio.
Globalstar isn't enormous, but it's not particularly small either. It has a market capitalization of US$2.7b, which means it would generally expect to see some institutions on the share registry. Our analysis of the ownership of the company, below, shows that institutional investors have bought into the company. Let's delve deeper into each type of owner, to discover more about Globalstar.
What Does The Institutional Ownership Tell Us About Globalstar?
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 Globalstar does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Globalstar, (below). Of course, keep in mind that there are other factors to consider, too.
It looks like hedge funds own 6.0% of Globalstar shares. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Globalstar's case, its Top Key Executive, James Monroe, is the largest shareholder, holding 62% of shares outstanding. With 6.0% and 3.0% of the shares outstanding respectively, Mudrick Capital Management, LP and The Vanguard Group, Inc. are the second and third largest shareholders.
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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.
Insider Ownership Of Globalstar
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.
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 that insiders own more than half the Globalstar, Inc. stock. This gives them a lot of power. That means insiders have a very meaningful US$1.7b stake in this US$2.7b business. Most would be pleased to see the board is investing alongside them. You may wish to discover if they have been buying or selling.
General Public Ownership
With a 20% ownership, the general public have some degree of sway over Globalstar. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Globalstar (at least 1 which is a bit unpleasant) , and understanding them should be part of your investment process.
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.
This article by Simply Wall St is general in nature. 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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