Individual investors who have a significant stake must be disappointed along with institutions after Meridian Corporation's (NASDAQ:MRBK) market cap dropped by US$14m

Key Insights

• Significant control over Meridian by individual investors implies that the general public has more power to influence management and governance-related decisions
• 50% of the business is held by the top 12 shareholders
• 13% of Meridian is held by insiders

A look at the shareholders of Meridian Corporation (NASDAQ:MRBK) can tell us which group is most powerful. The group holding the most number of shares in the company, around 30% to be precise, is individual investors. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 10% decrease in the stock price last week, individual investors suffered the most losses, but institutions who own 29% stock also took a hit.

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

View our latest analysis for Meridian

What Does The Institutional Ownership Tell Us About Meridian?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

Meridian 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 Meridian's historic earnings and revenue below, but keep in mind there's always more to the story.

It looks like hedge funds own 21% of Meridian shares. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. The company's largest shareholder is Ategra Capital Management, LLC, with ownership of 9.2%. Meanwhile, the second and third largest shareholders, hold 6.6% and 5.9%, of the shares outstanding, respectively. Furthermore, CEO Christopher Annas is the owner of 3.2% of the company's shares.

Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 12 shareholders, meaning that no single shareholder has a majority interest in the ownership.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Meridian

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

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

It seems insiders own a significant proportion of Meridian Corporation. Insiders have a US$16m stake in this US$125m business. 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-- including retail investors -- own 30% stake in the company, and hence can't easily be ignored. 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 an ownership of 6.6%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

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. For example, we've discovered 1 warning sign for Meridian that you should be aware of before investing here.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.