CPI Card Group Inc.'s (NASDAQ:PMTS) 23% loss last week hit both individual investors who own 43% as well as institutions

Key Insights

• The considerable ownership by private equity firms in CPI Card Group indicates that they collectively have a greater say in management and business strategy
• The top 4 shareholders own 53% of the company
• Institutions own 32% of CPI Card Group

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If you want to know who really controls CPI Card Group Inc. (NASDAQ:PMTS), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 43% to be precise, is private equity firms. Put another way, the group faces the maximum upside potential (or downside risk).

While institutions, who own 32% shares weren’t spared from last week’s US$66m market cap drop, private equity firms as a group suffered the maximum losses

Let's delve deeper into each type of owner of CPI Card Group, beginning with the chart below.

View our latest analysis for CPI Card Group

What Does The Institutional Ownership Tell Us About CPI Card Group?

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.

CPI Card Group already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 CPI Card Group, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in CPI Card Group. Looking at our data, we can see that the largest shareholder is Parallel49 Equity, ULC with 43% of shares outstanding. For context, the second largest shareholder holds about 3.7% of the shares outstanding, followed by an ownership of 3.2% by the third-largest shareholder.

On looking further, we found that 53% of the shares are owned by the top 4 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. 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 CPI Card Group

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.

Shareholders would probably be interested to learn that insiders own shares in CPI Card Group Inc.. In their own names, insiders own US$4.6m worth of stock in the US$227m company. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

With a 23% ownership, the general public, mostly comprising of individual investors, have some degree of sway over CPI Card Group. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

Private equity firms hold a 43% stake in CPI Card Group. This suggests they can be influential in key policy decisions. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

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 2 warning signs we've spotted with CPI Card Group (including 1 which is a bit concerning) .

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.