With 37% ownership in Pro-Dex, Inc. (NASDAQ:PDEX), hedge funds investors have a lot riding on the business
Key Insights
- Given the large stake in the stock by institutions, Pro-Dex's stock price might be vulnerable to their trading decisions
- The top 7 shareholders own 50% of the company
- Using data from company's past performance alongside ownership research, one can better assess the future performance of a company
A look at the shareholders of Pro-Dex, Inc. (NASDAQ:PDEX) can tell us which group is most powerful. With 37% stake, hedge funds possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).
And last week, hedge funds investors ended up benefitting the most after the company hit US$161m in market cap. The one-year return on investment is currently 170% and last week's gain would have been more than welcomed.
Let's delve deeper into each type of owner of Pro-Dex, beginning with the chart below.
View our latest analysis for Pro-Dex
What Does The Institutional Ownership Tell Us About Pro-Dex?
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 have a fair amount of stake in Pro-Dex. 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 Pro-Dex's earnings history below. Of course, the future is what really matters.
It looks like hedge funds own 37% of Pro-Dex shares. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Our data shows that AO Partners Llc is the largest shareholder with 28% of shares outstanding. In comparison, the second and third largest shareholders hold about 8.3% and 4.0% of the stock. Additionally, the company's CEO Richard Van Kirk directly holds 3.1% of the total shares outstanding.
We did some more digging and found that 7 of the top shareholders account for roughly 50% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.
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 is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.
Insider Ownership Of Pro-Dex
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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.
Our most recent data indicates that insiders own some shares in Pro-Dex, Inc.. As individuals, the insiders collectively own US$12m worth of the US$161m company. It is good to see some investment by insiders, but we usually like to see higher insider holdings. It might be worth checking if those insiders have been buying.
General Public Ownership
The general public-- including retail investors -- own 34% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
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. Take risks for example - Pro-Dex has 3 warning signs (and 2 which don't sit too well with us) we think you should know about.
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.