In this article, I’m going to take a look at Intuitive Surgical Inc’s (NASDAQ:ISRG) latest ownership structure, a non-fundamental factor which is important, but remains a less discussed subject among investors. The impact of a company’s ownership structure affects both its short- and long-term performance. Different types of investors can have varying degrees of influence on a company’s management team. For example, an active institutional investor may be more likely to hold a company accountable for certain actions whereas a passive fund will move in and out of stocks without regards to corporate governance. The implications of these institutions’ actions can either benefit or hinder individual investors, so it is important to understand the ownership composition of your stock investment. Now I will analyze ISRG’s shareholder registry in more detail.See our latest analysis for ISRG
Institutional OwnershipIn ISRG’s case, institutional ownership stands at 98.29%, significant enough to cause considerable price moves in the case of large institutional transactions, especially when there is a low level of public shares available on the market to trade. These moves, at least in the short-term, are generally observed in an institutional ownership mix comprising of active stock pickers, in particular levered hedge funds, which can cause large price swings. In the case of ISRG, investors need not worry about such volatility considering active hedge funds don’t have a significant stake. However, we should dig deeper into ISRG’s ownership structure and find out how other key ownership classes can affect its investment profile.
Insider OwnershipI find insiders are another important group of stakeholders, who are directly involved in making key decisions related to the use of capital. In essence, insider ownership is more about the alignment of shareholders’ interests with the management. Although individuals in ISRG hold only a 1.06% stake, given ISRG is a large-cap company, it is a relatively large amount. This is a good sign for shareholders as the company’s executives and directors have their incentives directly linked to the company’s performance. I will also like to check what insiders have been doing recently with their holdings. Insider buying may be a sign of upbeat future expectations, however, selling doesn’t necessarily mean the opposite as insiders may be motivated by their personal financial needs.
General Public OwnershipThe general public holds 0.16% stake in ISRG, which represents a relatively small class of owners. This size of ownership may not be enough to sway a policy decision in their favour, but they can still make a collective impact on company policies if it aligns with other large shareholders.
Private Company OwnershipPotential investors in ISRG should also look at another important group of investors: private companies, with a stake of 0.50%, who are primarily invested because of strategic and capital gain interests. An ownership of this size indicates a strong financial backing and has the potential to influence ISRG’s business strategy. Thus, investors should dig deeper into ISRG’s business relations with these companies and how it can affect shareholder returns in the long-term.
ISRG has a significant level of institutional ownership, which often causes long bull and bear trends if the perceived value of the stock changes for these big-ticket investors. This is to avoid getting trapped in a sustained sell-off that is often observed in stocks with this level of institutional participation. However, other important factors we must never forget to assess are the fundamentals. I recommend you take a look at our latest free analysis report on Intuitive Surgical to see ISRG’s fundamentals and whether it could be considered an undervalued opportunity.
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