Despite recent sales, Consumer Portfolio Services, Inc. (NASDAQ:CPSS) insiders remain the largest stockholders with 37% ownership

Key Insights

• Consumer Portfolio Services' significant insider ownership suggests inherent interests in company's expansion
• 50% of the business is held by the top 3 shareholders
• Insiders have been selling lately

Every investor in Consumer Portfolio Services, Inc. (NASDAQ:CPSS) should be aware of the most powerful shareholder groups. We can see that individual insiders own the lion's share in the company with 37% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Insiders are at the top of the company's shareholdings despite selling some shares recently. As a result, they were also the biggest winners as market cap hit US$199m last week.

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

Check out our latest analysis for Consumer Portfolio Services

What Does The Institutional Ownership Tell Us About Consumer Portfolio Services?

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 Consumer Portfolio Services. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Consumer Portfolio Services' earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Consumer Portfolio Services. Black Diamond Capital Management, L.L.C. is currently the company's largest shareholder with 24% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 18% and 7.7%, of the shares outstanding, respectively. Charles Bradley, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Consumer Portfolio Services

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.

It seems insiders own a significant proportion of Consumer Portfolio Services, Inc.. Insiders have a US$73m stake in this US$199m business. 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, who are usually individual investors, hold a 15% stake in Consumer Portfolio Services. 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.

Private Equity Ownership

With a stake of 24%, private equity firms could influence the Consumer Portfolio Services board. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Consumer Portfolio Services better, we need to consider many other factors. For instance, we've identified 4 warning signs for Consumer Portfolio Services (1 makes us a bit uncomfortable) that you should be aware of.

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.