After a year of 6.9% returns, Piper Sandler Companies' (NYSE:PIPR) share price drop last week may have less of an impact on institutional investors
Key Insights
Significantly high institutional ownership implies Piper Sandler Companies' stock price is sensitive to their trading actions
The top 8 shareholders own 51% of the company
Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business
Every investor in Piper Sandler Companies (NYSE:PIPR) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 86% to be precise, is institutions. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
Institutional investors was the group most impacted after the company's market cap fell to US$2.1b last week. However, the 6.9% one-year return to shareholders may have helped lessen their pain. They should, however, be mindful of further losses in the future.
Let's take a closer look to see what the different types of shareholders can tell us about Piper Sandler Companies.
Check out our latest analysis for Piper Sandler Companies
What Does The Institutional Ownership Tell Us About Piper Sandler Companies?
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.
Piper Sandler Companies already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Piper Sandler Companies' earnings history below. Of course, the future is what really matters.
Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Hedge funds don't have many shares in Piper Sandler Companies. BlackRock, Inc. is currently the largest shareholder, with 19% of shares outstanding. In comparison, the second and third largest shareholders hold about 13% and 4.1% of the stock. Furthermore, CEO Chad Abraham is the owner of 0.7% of the company's shares.
We also observed that the top 8 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 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 Piper Sandler Companies
The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.
Our most recent data indicates that insiders own some shares in Piper Sandler Companies. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around US$86m worth of shares (at current prices). It is good to see this level of investment by insiders. You can check here to see if those insiders have been buying recently.
General Public Ownership
The general public, who are usually individual investors, hold a 10% stake in Piper Sandler Companies. 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:
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. For example, we've discovered 2 warning signs for Piper Sandler Companies that you should be aware of before investing here.
But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.
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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