Could Veritex Holdings, Inc.’s (NASDAQ:VBTX) Investor Composition Influence The Stock Price?

A look at the shareholders of Veritex Holdings, Inc. (NASDAQ:VBTX) can tell us which group is most powerful. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. Companies that used to be publicly owned tend to have lower insider ownership.

Veritex Holdings has a market capitalization of US$873m, so we would expect some institutional investors to have noticed the stock. Our analysis of the ownership of the company, below, shows that institutional investors have bought into the company. Let’s take a closer look to see what the different types of shareholder can tell us about Veritex Holdings.

See our latest analysis for Veritex Holdings

NasdaqGM:VBTX Ownership Summary June 3rd 2020
NasdaqGM:VBTX Ownership Summary June 3rd 2020

What Does The Institutional Ownership Tell Us About Veritex Holdings?

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.

We can see that Veritex Holdings does have institutional investors; and they hold 77% of the stock. 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 Veritex Holdings, (below). Of course, keep in mind that there are other factors to consider, too.

NasdaqGM:VBTX Income Statement June 3rd 2020
NasdaqGM:VBTX Income Statement June 3rd 2020

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. It would appear that 6.0% of Veritex Holdings shares are controlled by hedge funds. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. BlackRock, Inc. is currently the largest shareholder, with 14% of shares outstanding. The second largest shareholder with 6.4%, is The Vanguard Group, Inc., followed by FJ Capital Management, LLC, with an ownership of 6.0%.

A closer look at our ownership figures suggests that the top 14 shareholders have a combined ownership of 51% implying that no one share holder has a majority.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Veritex Holdings

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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.

I can report that insiders do own shares in Veritex Holdings, Inc.. As individuals, the insiders collectively own US$31m worth of the US$873m company. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, with a 14% stake in the company, will not 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We’ve spotted 2 warning signs for Veritex Holdings you should be aware of.

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. 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. Thank you for reading.