Institutional investors have a lot riding on Stellar Bancorp, Inc. (NYSE:STEL) with 56% ownership

Key Insights

• Given the large stake in the stock by institutions, Stellar Bancorp's stock price might be vulnerable to their trading decisions
• A total of 23 investors have a majority stake in the company with 50% ownership
• Recent sales by insiders

A look at the shareholders of Stellar Bancorp, Inc. (NYSE:STEL) can tell us which group is most powerful. We can see that institutions own the lion's share in the company with 56% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And as as result, institutional investors reaped the most rewards after the company's stock price gained 4.1% last week. The gains from last week would have further boosted the one-year return to shareholders which currently stand at 20%.

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

View our latest analysis for Stellar Bancorp

What Does The Institutional Ownership Tell Us About Stellar 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.

As you can see, institutional investors have a fair amount of stake in Stellar Bancorp. 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. 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 Stellar Bancorp's historic earnings and revenue below, but keep in mind there's always more to the story.

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. We note that hedge funds don't have a meaningful investment in Stellar Bancorp. The company's largest shareholder is BlackRock, Inc., with ownership of 14%. The Vanguard Group, Inc. is the second largest shareholder owning 6.2% of common stock, and State Street Global Advisors, Inc. holds about 3.8% of the company stock. Furthermore, CEO Robert Franklin is the owner of 0.8% of the company's shares.

After doing some more digging, we found that the top 23 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

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 Stellar Bancorp

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

Shareholders would probably be interested to learn that insiders own shares in Stellar Bancorp, Inc.. The insiders have a meaningful stake worth US$148m. Most would see this as a real positive. Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

With a 35% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Stellar 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 Stellar Bancorp better, we need to consider many other factors. To that end, you should learn about the 3 warning signs we've spotted with Stellar Bancorp (including 1 which can't be ignored) .

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.