FS Bancorp, Inc.'s (NASDAQ:FSBW) large institutional owners must be happy as stock continues to impress, up 11% over the past week

Key Insights

• Given the large stake in the stock by institutions, FS Bancorp's stock price might be vulnerable to their trading decisions
• The top 10 shareholders own 51% of the company
• Insider ownership in FS Bancorp is 10%

To get a sense of who is truly in control of FS Bancorp, Inc. (NASDAQ:FSBW), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 64% to be precise, is institutions. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And last week, institutional investors ended up benefitting the most after the company hit US$281m in market cap. The one-year return on investment is currently 25% and last week's gain would have been more than welcomed.

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

Check out our latest analysis for FS Bancorp

What Does The Institutional Ownership Tell Us About FS Bancorp?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

FS Bancorp already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 FS Bancorp's historic earnings and revenue below, but keep in mind there's always more to the story.

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. We note that hedge funds don't have a meaningful investment in FS Bancorp. The company's largest shareholder is T. Rowe Price Group, Inc., with ownership of 13%. FS Bancorp, Inc.Employee Stock ownership Plan is the second largest shareholder owning 6.1% of common stock, and BlackRock, Inc. holds about 5.9% of the company stock. In addition, we found that Joseph Adams, the CEO has 1.6% of the shares allocated to their name.

We also observed that the top 10 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.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of FS Bancorp

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.

Our information suggests that insiders maintain a significant holding in FS Bancorp, Inc.. Insiders have a US$28m stake in this US$281m 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

With a 20% ownership, the general public, mostly comprising of individual investors, have some degree of sway over FS Bancorp. 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.

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 risks, for instance. Every company has them, and we've spotted 1 warning sign for FS Bancorp you should know about.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com