Could the ownership structure of the Shenandoah Telecommunications Company (NASDAQ:SHEN) tell us anything useful?
The large shareholder groups of Shenandoah Telecommunications Company (NASDAQ:SHEN) have power over the company. Generally speaking, as a company grows, institutions increase their ownership. Conversely, insiders often decrease their ownership over time. Companies that were previously publicly owned tend to have less insider ownership.
Shenandoah Telecommunications isn’t huge, but it’s not particularly small either. It has a market capitalization of US$1.1 billion, which means it generally expects to see certain institutions listed on the stock register. Our analysis of societal ownership below shows that institutions own shares in society. We can zoom in on the different ownership groups, to learn more about Shenandoah Telecommunications.
Check out our latest analysis for Shenandoah Telecommunications
What does institutional ownership tell us about Shenandoah Telecommunications?
Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.
As you can see, institutional investors own a sizeable share of Shenandoah Telecommunications. This suggests some credibility with professional investors. But we cannot rely solely on this fact since institutions sometimes make bad investments, like everyone else. It is not uncommon to see a sharp decline in the stock price if two large institutional investors attempt to sell a stock at the same time. It is therefore worth checking the past earnings trajectory of Shenandoah Telecommunications (below). Of course, keep in mind that there are other factors to consider as well.
Investors should note that institutions actually own more than half of the company, so they can collectively wield significant power. Hedge funds don’t have a lot of shares in Shenandoah Telecommunications. Our data shows that BlackRock, Inc. is the largest shareholder with 16% of shares outstanding. For context, the second shareholder owns approximately 10% of the outstanding shares, followed by a 3.6% ownership by the third shareholder. Christopher French, who is the third shareholder, also holds the title of Chairman of the Board.
After digging a little deeper, we found that the top 17 held combined ownership of 50% of the company, suggesting that no single shareholder has significant control over the company.
While it makes sense to study data on a company’s institutional ownership, it also makes sense to study analyst sentiment to find out which way the wind is blowing. A number of analysts cover the stock, so you can look at growth forecasts quite easily.
Insider ownership of Shenandoah Telecommunications
The definition of company insiders can be subjective and varies from jurisdiction to jurisdiction. Our data reflects individual insiders, capturing at least board members. Management is ultimately responsible to the board of directors. However, it is not uncommon for managers to be members of the management board, especially if they are founders or CEOs.
Most view insider ownership as a positive because it can indicate that the board is well aligned with other shareholders. However, there are times when too much power is concentrated within this group.
We may report that insiders hold shares of Shenandoah Telecommunications Company. It’s a pretty big company, so it’s generally a positive to see a potentially meaningful alignment. In this case, they own about $44 million worth of stock (at today’s prices). If you want to explore the issue of insider alignment, you can click here to see if insiders have been buying or selling.
General public property
The general public, including retail investors, owns 39% of the company’s capital and therefore cannot be easily ignored. This size of ownership, although considerable, may not be sufficient to change company policy if the decision is not in line with other large shareholders.
While it is worth considering the different groups that own a business, there are other, even more important factors. Take for example the ubiquitous specter of investment risk. We have identified 2 warning signs with Shenandoah Telecommunications (at least 1, which is significant), and understanding them should be part of your investment process.
If you prefer to find out what analysts are predicting in terms of future growth, don’t miss this free analyst forecast report.
NB: The figures in this article are calculated using trailing twelve month data, which refers to the 12 month period ending on the last day of the month in which the financial statements are dated. This may not be consistent with the annual report figures for the full year.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.