Individual investors who have a significant stake must be disappointed along with institutions after Medallion Financial Corp.'s (NASDAQ:MFIN) market cap dropped by US$22m

Key Insights

• The considerable ownership by individual investors in Medallion Financial indicates that they collectively have a greater say in management and business strategy
• The top 25 shareholders own 41% of the company
• 21% of Medallion Financial is held by insiders

Every investor in Medallion Financial Corp. (NASDAQ:MFIN) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual investors with 49% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While institutions who own 29% came under pressure after market cap dropped to US$165m last week,individual investors took the most losses.

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

View our latest analysis for Medallion Financial

What Does The Institutional Ownership Tell Us About Medallion Financial?

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 Medallion Financial. 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. 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 Medallion Financial, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Medallion Financial. Our data suggests that Andrew Murstein, who is also the company's President, holds the most number of shares at 10.0%. When an insider holds a sizeable amount of a company's stock, investors consider it as a positive sign because it suggests that insiders are willing to have their wealth tied up in the future of the company. With 7.8% and 4.3% of the shares outstanding respectively, Alvin Murstein and The Vanguard Group, Inc. are the second and third largest shareholders. Interestingly, the second-largest shareholder, Alvin Murstein is also Chief Executive Officer, again, pointing towards strong insider ownership amongst the company's top shareholders.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

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

Insider Ownership Of Medallion Financial

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.

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.

It seems insiders own a significant proportion of Medallion Financial Corp.. Insiders own US$35m worth of shares in the US$165m company. 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

With a 49% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Medallion Financial. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Medallion Financial (of which 2 are a bit unpleasant!) you should know about.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com