After losing 14% in the past year, Standard Motor Products, Inc. (NYSE:SMP) institutional owners must be relieved by the recent gain

Key Insights

• Given the large stake in the stock by institutions, Standard Motor Products' stock price might be vulnerable to their trading decisions
• The top 9 shareholders own 51% of the company
• Recent sales by insiders

We've discovered 4 warning signs about Standard Motor Products. View them for free.

If you want to know who really controls Standard Motor Products, Inc. (NYSE:SMP), then you'll have to look at the makeup of its share registry. With 76% stake, institutions possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Last week's US$72m market cap gain would probably be appreciated by institutional investors, especially after a year of 14% losses.

Let's take a closer look to see what the different types of shareholders can tell us about Standard Motor Products.

View our latest analysis for Standard Motor Products

What Does The Institutional Ownership Tell Us About Standard Motor Products?

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.

As you can see, institutional investors have a fair amount of stake in Standard Motor Products. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Standard Motor Products' historic earnings and revenue below, but keep in mind there's always more to the story.

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. We note that hedge funds don't have a meaningful investment in Standard Motor Products. Looking at our data, we can see that the largest shareholder is BlackRock, Inc. with 14% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 7.3% and 6.6%, of the shares outstanding, respectively. Furthermore, CEO Eric Sills is the owner of 2.7% of the company's shares.

We also observed that the top 9 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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 is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Standard Motor Products

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.

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.

Shareholders would probably be interested to learn that insiders own shares in Standard Motor Products, Inc.. In their own names, insiders own US$27m worth of stock in the US$554m 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

The general public-- including retail investors -- own 19% 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. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Standard Motor Products (at least 2 which shouldn't be ignored) , and understanding them should be part of your investment process.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.