Institutional owners may consider drastic measures as Eagle Bancorp, Inc.'s (NASDAQ:EGBN) recent US$56m drop adds to long-term losses

Key Insights

• Institutions' substantial holdings in Eagle Bancorp implies that they have significant influence over the company's share price
• The top 11 shareholders own 51% of the company
• Insiders have been selling lately

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If you want to know who really controls Eagle Bancorp, Inc. (NASDAQ:EGBN), then you'll have to look at the makeup of its share registry. With 77% stake, institutions possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

And institutional investors saw their holdings value drop by 8.8% last week. The recent loss, which adds to a one-year loss of 10% for stockholders, may not sit well with this group of investors. Often called “market movers", institutions wield significant power in influencing the price dynamics of any stock. As a result, if the decline continues, institutional investors may be pressured to sell Eagle Bancorp which might hurt individual investors.

In the chart below, we zoom in on the different ownership groups of Eagle Bancorp.

See our latest analysis for Eagle Bancorp

What Does The Institutional Ownership Tell Us About Eagle Bancorp?

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.

We can see that Eagle Bancorp does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Eagle Bancorp, (below). Of course, keep in mind that there are other factors to consider, too.

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Eagle Bancorp is not owned by hedge funds. The company's largest shareholder is BlackRock, Inc., with ownership of 15%. For context, the second largest shareholder holds about 8.9% of the shares outstanding, followed by an ownership of 5.4% by the third-largest shareholder. In addition, we found that Susan Riel, the CEO has 1.2% of the shares allocated to their name.

Looking at the shareholder registry, we can see that 51% of the ownership is controlled by the top 11 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Eagle Bancorp

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. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 Eagle Bancorp, Inc.. In their own names, insiders own US$22m worth of stock in the US$586m 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, who are usually individual investors, hold a 19% stake in Eagle Bancorp. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Eagle Bancorp better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Eagle Bancorp , and understanding them should be part of your investment process.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts .

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.