Recent uptick might appease Synaptics Incorporated (NASDAQ:SYNA) institutional owners after losing 27% over the past year
Key Insights
Given the large stake in the stock by institutions, Synaptics' stock price might be vulnerable to their trading decisions
51% of the business is held by the top 8 shareholders
Every investor in Synaptics Incorporated (NASDAQ:SYNA) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 89% to be precise, is institutions. Put another way, the group faces the maximum upside potential (or downside risk).
Institutional investors would probably welcome last week's 4.4% increase in share prices after a year of 27% losses as a sign that returns are likely to begin trending higher.
Let's take a closer look to see what the different types of shareholders can tell us about Synaptics.
See our latest analysis for Synaptics
What Does The Institutional Ownership Tell Us About Synaptics?
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.
We can see that Synaptics does have institutional investors; and they hold a good portion of the company's stock. 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 Synaptics' historic earnings and revenue below, but keep in mind there's always more to the story.
Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. We note that hedge funds don't have a meaningful investment in Synaptics. Looking at our data, we can see that the largest shareholder is BlackRock, Inc. with 13% of shares outstanding. For context, the second largest shareholder holds about 11% of the shares outstanding, followed by an ownership of 9.3% by the third-largest shareholder.
On further inspection, we found that more than half the company's shares are owned by the top 8 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.
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 are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of Synaptics
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 data suggests that insiders own under 1% of Synaptics Incorporated in their own names. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own US$34m worth of shares. Arguably, recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.
General Public Ownership
With a 10% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Synaptics. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Synaptics better, we need to consider many other factors. Be aware that Synaptics is showing 2 warning signs in our investment analysis , and 1 of those is concerning...
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.
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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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