Every investor in Applied Blockchain, Inc. (NASDAQ: APLD) should be aware of the most powerful shareholder groups. Institutions often own shares in more established companies, while it is not unusual to see insiders own a fair bit of smaller companies. I quite like to see at least a little bit of insider ownership. As Charlie Munger said ‘Show me the incentive and I will show you the outcome.
Applied Blockchain has a market capitalization of US $ 1.6b, so we would expect some institutional investors to have noticed the stock. Taking a look at our data on the ownership groups (below), it seems that institutions are not really that prevalent on the share registry. Let’s delve deeper into each type of owner, to discover more about Applied Blockchain.
Check out our latest analysis for Applied Blockchain
What Does The Lack Of Institutional Ownership Tell Us About Applied Blockchain?
We do not tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it’s not particularly common.
There are multiple explanations for why institutions do not own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at the company. It is also possible that fund managers do not own the stock because they are not convinced it will perform well. Applied Blockchain’s earnings and revenue track record (below) may not be compelling to institutional investors – or they simply might not have looked at the business closely.
We note that hedge funds do not have a meaningful investment in Applied Blockchain. Looking at our data, we can see that the largest shareholder is Cummins Family Ltd with 32% of outstanding shares. The second and third largest shareholders are Xsquared Holding Limited and Gmr Limited, with an equal amount of shares to their name at 14%. In addition, we found that Wesley Cummins, the CEO has 6.6% of the shares allocated to their name.
After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company’s shares, implying that they have considerable power to influence the company’s decisions.
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. Our information suggests that there is not any analyst coverage of the stock, so it is probably little known.
Insider Ownership Of Applied Blockchain
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 information suggests that insiders maintain a significant holding in Applied Blockchain, Inc .. It has a market capitalization of just US $ 1.6b, and insiders have US $ 303m worth of shares in their own names. That’s quite significant. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public– including retail investors – own 21% stake in the company, and hence can not easily be ignored. While this group can not necessarily call the shots, it can certainly have a real influence on how the company is run.
Private Company Ownership
Our data indicates that Private Companies hold 59%, of the company’s shares. 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.
It is always worth thinking about the different groups who own shares in a company. But to understand Applied Blockchain better, we need to consider many other factors. Be aware that Applied Blockchain is showing 5 warning signs in our investment analysis and 1 of those makes us a bit uncomfortable …
If you would prefer check out another company – one with potentially superior financials – then do not miss this free list of interesting companies, backed by strong financial data.
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.