Stock Analysis

Is Orion Energy Systems, Inc. (NASDAQ:OESX) Popular Amongst Insiders?

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NasdaqCM:OESX
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A look at the shareholders of Orion Energy Systems, Inc. (NASDAQ:OESX) can tell us which group is most powerful. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. I quite like to see at least a little bit of insider ownership. As Charlie Munger said 'Show me the incentive and I will show you the outcome.

With a market capitalization of US$299m, Orion Energy Systems is a small cap stock, so it might not be well known by many institutional investors. In the chart below, we can see that institutions own shares in the company. Let's take a closer look to see what the different types of shareholders can tell us about Orion Energy Systems.

View our latest analysis for Orion Energy Systems

ownership-breakdown
NasdaqCM:OESX Ownership Breakdown January 29th 2021

What Does The Institutional Ownership Tell Us About Orion Energy Systems?

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.

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

earnings-and-revenue-growth
NasdaqCM:OESX Earnings and Revenue Growth January 29th 2021

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. It would appear that 7.9% of Orion Energy Systems shares are controlled by hedge funds. That's interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. Looking at our data, we can see that the largest shareholder is North Star Investment Management Corporation with 9.5% of shares outstanding. With 7.9% and 5.3% of the shares outstanding respectively, Renaissance Technologies Corp. and The Vanguard Group, Inc. are the second and third largest shareholders. In addition, we found that Michael Altschaefl, the CEO has 2.4% of the shares allocated to their name.

After doing some more digging, we found that the top 12 have the combined ownership of 52% 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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Orion Energy Systems

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

It seems insiders own a significant proportion of Orion Energy Systems, Inc.. It has a market capitalization of just US$299m, and insiders have US$48m 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 holds a 24% stake in Orion Energy Systems. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Orion Energy Systems better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 3 warning signs for Orion Energy Systems you should know about.

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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