Stock Analysis

Both individual investors who control a good portion of South Plains Financial, Inc. (NASDAQ:SPFI) along with institutions must be dismayed after last week's 12% decrease

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Key Insights

  • The considerable ownership by individual investors in South Plains Financial indicates that they collectively have a greater say in management and business strategy
  • 50% of the business is held by the top 11 shareholders
  • 13% of South Plains Financial is held by insiders

A look at the shareholders of South Plains Financial, Inc. (NASDAQ:SPFI) can tell us which group is most powerful. With 37% stake, individual investors possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While institutions who own 27% came under pressure after market cap dropped to US$382m last week,individual investors took the most losses.

In the chart below, we zoom in on the different ownership groups of South Plains Financial.

Check out our latest analysis for South Plains Financial

NasdaqGS:SPFI Ownership Breakdown March 14th 2023

What Does The Institutional Ownership Tell Us About South Plains Financial?

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.

South Plains Financial 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at South Plains Financial's earnings history below. Of course, the future is what really matters.

NasdaqGS:SPFI Earnings and Revenue Growth March 14th 2023

Hedge funds don't have many shares in South Plains Financial. The company's largest shareholder is South Plains Financial, Inc. Employee Stock Ownership Plan, with ownership of 14%. In comparison, the second and third largest shareholders hold about 9.7% and 9.3% of the stock. Curtis Griffith, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board.

Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 11 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of South Plains Financial

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own a reasonable proportion of South Plains Financial, Inc.. It has a market capitalization of just US$382m, and insiders have US$49m worth of shares in their own names. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 37% stake in the company, and hence can't easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Company Ownership

Our data indicates that Private Companies hold 9.7%, of the company's shares. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand South Plains Financial better, we need to consider many other factors. Be aware that South Plains Financial is showing 2 warning signs in our investment analysis , and 1 of those is significant...

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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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