Western New England Bancorp, Inc.'s (NASDAQ:WNEB) high institutional ownership speaks for itself as stock continues to impress, up 10% over last week

Key Insights

• Significantly high institutional ownership implies Western New England Bancorp's stock price is sensitive to their trading actions
• A total of 13 investors have a majority stake in the company with 51% ownership
• Insiders have been buying lately

To get a sense of who is truly in control of Western New England Bancorp, Inc. (NASDAQ:WNEB), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are institutions with 45% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And things are looking up for institutional investors after the company gained US$14m in market cap last week. The gains from last week would have further boosted the one-year return to shareholders which currently stand at 23%.

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

View our latest analysis for Western New England Bancorp

What Does The Institutional Ownership Tell Us About Western New England 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.

Western New England 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 Western New England Bancorp's historic earnings and revenue below, but keep in mind there's always more to the story.

Our data indicates that hedge funds own 11% of Western New England Bancorp. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Dimensional Fund Advisors LP is currently the company's largest shareholder with 7.6% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 6.8% and 5.5%, of the shares outstanding, respectively. Additionally, the company's CEO James Hagan directly holds 1.4% of the total shares outstanding.

After doing some more digging, we found that the top 13 have the combined ownership of 51% in the company, suggesting that no single shareholder has significant control over the company.

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 Western New England Bancorp

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.

We can report that insiders do own shares in Western New England Bancorp, Inc.. As individuals, the insiders collectively own US$8.7m worth of the US$147m company. Some would say this shows alignment of interests between shareholders and the board, though we generally prefer to see bigger insider holdings. 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 31% stake in Western New England 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. Case in point: We've spotted 2 warning signs for Western New England Bancorp you should be aware of.

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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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