CF Bankshares Inc.'s (NASDAQ:CFBK) market cap dropped US$24m last week; individual investors who hold 36% were hit as were institutions

Key Insights

• Significant control over CF Bankshares by individual investors implies that the general public has more power to influence management and governance-related decisions
• 51% of the business is held by the top 9 shareholders
• Recent sales by insiders

A look at the shareholders of CF Bankshares Inc. (NASDAQ:CFBK) can tell us which group is most powerful. With 36% stake, individual investors 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).

While institutions who own 25% came under pressure after market cap dropped to US$172m last week,individual investors took the most losses.

Let's delve deeper into each type of owner of CF Bankshares, beginning with the chart below.

View our latest analysis for CF Bankshares

What Does The Institutional Ownership Tell Us About CF Bankshares?

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.

CF Bankshares already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 CF Bankshares, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in CF Bankshares. Looking at our data, we can see that the largest shareholder is Castle Creek Advisors VIII LLC with 24% of shares outstanding. AllianceBernstein L.P. is the second largest shareholder owning 6.3% of common stock, and Edward Cochran holds about 5.4% of the company stock. Edward Cochran, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors. Furthermore, CEO Timothy O’Dell is the owner of 5.1% of the company's shares.

We did some more digging and found that 9 of the top shareholders account for roughly 51% 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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of CF Bankshares

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 information suggests that insiders maintain a significant holding in CF Bankshares Inc.. Insiders have a US$26m stake in this US$172m business. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 36% stake in CF Bankshares. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Equity Ownership

With a stake of 24%, private equity firms could influence the CF Bankshares board. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we've identified 2 warning signs for CF Bankshares (1 shouldn't be ignored) that you should be aware of.

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.

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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.