In spite of recent selling, insiders at Consumer Portfolio Services, Inc. (NASDAQ:CPSS) are the largest shareholders; own 36% shares

Key Insights

• Consumer Portfolio Services' significant insider ownership suggests inherent interests in company's expansion
• A total of 4 investors have a majority stake in the company with 54% ownership
• Insiders have been selling lately

To get a sense of who is truly in control of Consumer Portfolio Services, Inc. (NASDAQ:CPSS), it is important to understand the ownership structure of the business. With 36% stake, individual insiders possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Insiders own the top position in the company’s share registry despite recent sales and as a result, were the biggest beneficiaries of last week’s 13% gain.

Let's delve deeper into each type of owner of Consumer Portfolio Services, beginning with the chart below.

Check out our latest analysis for Consumer Portfolio Services

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

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.

We can see that Consumer Portfolio Services does have institutional investors; and they hold a good portion of the company's stock. 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 Consumer Portfolio Services' historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Consumer Portfolio Services. Black Diamond Capital Management, L.L.C. is currently the largest shareholder, with 24% of shares outstanding. For context, the second largest shareholder holds about 18% of the shares outstanding, followed by an ownership of 7.5% by the third-largest shareholder. Charles Bradley, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

To make our study more interesting, we found that the top 4 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

Our information suggests that insiders maintain a significant holding in Consumer Portfolio Services, Inc.. It has a market capitalization of just US$198m, and insiders have US$72m worth of shares in their own names. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 17% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

With a stake of 24%, private equity firms could influence the Consumer Portfolio Services board. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Consumer Portfolio Services is showing 3 warning signs in our investment analysis , and 1 of those is significant...

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.