SolarEdge Technologies, Inc.'s (NASDAQ:SEDG) market cap decline of US$1.5b may not have as much of an impact on institutional owners after a year of 0.3% returns
Every investor in SolarEdge Technologies, Inc. (NASDAQ:SEDG) should be aware of the most powerful shareholder groups. We can see that institutions own the lion's share in the company with 89% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
Institutional investors endured the highest losses after the company's market cap fell by US$1.5b last week. However, the 0.3% one-year returns may have helped alleviate their overall losses. But they would probably be wary of future losses.
Let's take a closer look to see what the different types of shareholders can tell us about SolarEdge Technologies.
View our latest analysis for SolarEdge Technologies
What Does The Institutional Ownership Tell Us About SolarEdge Technologies?
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 SolarEdge Technologies 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 SolarEdge Technologies, (below). Of course, keep in mind that there are other factors to consider, too.
Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. SolarEdge Technologies is not owned by hedge funds. BlackRock, Inc. is currently the largest shareholder, with 10.0% of shares outstanding. The Vanguard Group, Inc. is the second largest shareholder owning 4.0% of common stock, and State Street Global Advisors, Inc. holds about 3.7% of the company stock.
Looking at the shareholder registry, we can see that 51% of the ownership is controlled by the top 25 shareholders, meaning that no single shareholder has a majority interest in the ownership.
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 a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
Insider Ownership Of SolarEdge Technologies
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.
Our data suggests that insiders own under 1% of SolarEdge Technologies, Inc. in their own names. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own US$143m of stock. 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
The general public-- including retail investors -- own 10% stake in the company, and hence can't easily be ignored. 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.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 3 warning signs for SolarEdge Technologies you should be aware of.
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.
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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