Could Weebit Nano Limited’s (ASX:WBT) Investor Composition Influence The Stock Price?

Every investor in Weebit Nano Limited (ASX:WBT) should be aware of the most powerful shareholder groups. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. I quite like to see at least a little bit of insider ownership. As Charlie Munger said ‘Show me the incentive and I will show you the outcome.’

Weebit Nano is not a large company by global standards. It has a market capitalization of AU$35m, which means it wouldn’t have the attention of many institutional investors. In the chart below below, we can see that institutions don’t own shares in the company. Let’s take a closer look to see what the different types of shareholder can tell us about WBT.

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See our latest analysis for Weebit Nano

ASX:WBT Ownership Summary, May 16th 2019
ASX:WBT Ownership Summary, May 16th 2019

What Does The Lack Of Institutional Ownership Tell Us About Weebit Nano?

Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it’s unusual to see larger companies without any institutional investors.

There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don’t attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. On the other hand, it’s always possible that professional investors are avoiding a company because they don’t think it’s the best place for their money. Weebit Nano might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

ASX:WBT Income Statement, May 16th 2019
ASX:WBT Income Statement, May 16th 2019

We note that hedge funds don’t have a meaningful investment in Weebit Nano. Our information suggests that there isn’t any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Weebit Nano

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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.

It seems insiders own a significant proportion of Weebit Nano Limited. Insiders own AU$9.6m worth of shares in the AU$35m company. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public, mostly retail investors, hold a substantial 69% stake in WBT, suggesting it is a fairly popular stock. This size of ownership gives retail investors collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Next Steps:

It’s always worth thinking about the different groups who own shares in a company. But to understand Weebit Nano better, we need to consider many other factors.

Many find it useful to take an in depth look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow .

If you would prefer check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, backed by strong financial data.

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.