RADCOM Ltd.'s (NASDAQ:RDCM) largest shareholders are retail investors with 36% ownership, institutions own 29%
Key Insights
Significant control over RADCOM by retail investors implies that the general public has more power to influence management and governance-related decisions
A total of 6 investors have a majority stake in the company with 51% ownership
A look at the shareholders of RADCOM Ltd. (NASDAQ:RDCM) can tell us which group is most powerful. With 36% stake, retail investors possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
Meanwhile, institutions make up 29% of the company’s shareholders. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies.
In the chart below, we zoom in on the different ownership groups of RADCOM.
View our latest analysis for RADCOM
What Does The Institutional Ownership Tell Us About RADCOM?
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.
RADCOM already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 RADCOM's historic earnings and revenue below, but keep in mind there's always more to the story.
Our data indicates that hedge funds own 15% of RADCOM. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Estate of Zohar Zisapel is currently the largest shareholder, with 17% of shares outstanding. In comparison, the second and third largest shareholders hold about 15% and 5.2% of the stock. Additionally, the company's CEO Eyal Harari directly holds 1.1% of the total shares outstanding.
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.
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 some analyst coverage of the stock, but it could still become more well known, with time.
Insider Ownership Of RADCOM
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.
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.
We can report that insiders do own shares in RADCOM Ltd.. In their own names, insiders own US$5.5m worth of stock in the US$148m company. Some would say this shows alignment of interests between shareholders and the board, though we generally prefer to see bigger insider holdings. But it might be worth checking if those insiders have been selling.
General Public Ownership
The general public, who are usually individual investors, hold a 36% stake in RADCOM. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.
Private Company Ownership
We can see that Private Companies own 17%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.
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. Case in point: We've spotted 3 warning signs for RADCOM you should be aware of, and 1 of them shouldn't be ignored.
If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.
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.
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