TPI Composites, Inc.'s (NASDAQ:TPIC) large institutional owners must be happy as stock continues to impress, up 13% over the past week

Key Insights

• Significantly high institutional ownership implies TPI Composites' stock price is sensitive to their trading actions
• 51% of the business is held by the top 12 shareholders
• Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company

Every investor in TPI Composites, Inc. (NASDAQ:TPIC) should be aware of the most powerful shareholder groups. With 77% stake, institutions possess the maximum shares in the company. 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$22m in market cap last week. The gains from last week would have further boosted the one-year return to shareholders which currently stand at 16%.

Let's delve deeper into each type of owner of TPI Composites, beginning with the chart below.

Check out our latest analysis for TPI Composites

What Does The Institutional Ownership Tell Us About TPI Composites?

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.

TPI Composites 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of TPI Composites, (below). Of course, keep in mind that there are other factors to consider, too.

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Hedge funds don't have many shares in TPI Composites. Brookfield Corporation is currently the company's largest shareholder with 9.7% of shares outstanding. In comparison, the second and third largest shareholders hold about 6.7% and 5.3% of the stock.

After doing some more digging, we found that the top 12 have the combined ownership of 51% in the company, suggesting that no single shareholder has significant control over the company.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of TPI Composites

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

We can report that insiders do own shares in TPI Composites, Inc.. As individuals, the insiders collectively own US$14m worth of the US$179m company. This shows at least some alignment, but we usually like to see larger insider holdings. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 15% ownership, the general public, mostly comprising of individual investors, have some degree of sway over TPI Composites. 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 TPI Composites better, we need to consider many other factors. For instance, we've identified 5 warning signs for TPI Composites (1 is a bit concerning) that you should be aware of.

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.