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With 38% ownership, insiders at INNOVATE Corp. (NYSE:VATE) are pretty optimistic and have been buying recently
Key Insights
Insiders appear to have a vested interest in INNOVATE's growth, as seen by their sizeable ownership
52% of the business is held by the top 5 shareholders
Every investor in INNOVATE Corp. (NYSE:VATE) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 38% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
Notably, insiders have bought shares recently. This could be interpreted as insiders anticipating a rise in stock prices in the near future.
Let's take a closer look to see what the different types of shareholders can tell us about INNOVATE.
See our latest analysis for INNOVATE
What Does The Institutional Ownership Tell Us About INNOVATE?
Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.
As you can see, institutional investors have a fair amount of stake in INNOVATE. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at INNOVATE's earnings history below. Of course, the future is what really matters.
Hedge funds don't have many shares in INNOVATE. Avram Glazer is currently the largest shareholder, with 29% of shares outstanding. Jefferies Group LLC, Asset Management Arm is the second largest shareholder owning 6.9% of common stock, and Michael Gorzynski holds about 6.5% of the company stock. Additionally, the company's CEO Wayne Barr directly holds 0.6% of the total shares outstanding.
On looking further, we found that 52% of the shares are owned by the top 5 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.
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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.
Insider Ownership Of INNOVATE
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.
It seems insiders own a significant proportion of INNOVATE Corp.. It has a market capitalization of just US$104m, and insiders have US$40m worth of shares in their own names. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.
General Public Ownership
The general public-- including retail investors -- own 28% stake in the company, and hence can't easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should learn about the 4 warning signs we've spotted with INNOVATE (including 3 which don't sit too well with us) .
Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.
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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