Institutional investors in Aspen Aerogels, Inc. (NYSE:ASPN) lost 16% last week but have reaped the benefits of longer-term growth

By
Simply Wall St
Published
January 19, 2022
NYSE:ASPN
Source: Shutterstock

Every investor in Aspen Aerogels, Inc. (NYSE:ASPN) should be aware of the most powerful shareholder groups. With 69% stake, institutions possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Institutional investors was the group most impacted after the company's market cap fell to US$1.2b last week. However, the 95% one-year return to shareholders might have softened the blow. But they would probably be wary of future losses.

In the chart below, we zoom in on the different ownership groups of Aspen Aerogels.

View our latest analysis for Aspen Aerogels

ownership-breakdown
NYSE:ASPN Ownership Breakdown January 19th 2022

What Does The Institutional Ownership Tell Us About Aspen Aerogels?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

Aspen Aerogels already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Aspen Aerogels' earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
NYSE:ASPN Earnings and Revenue Growth January 19th 2022

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 15% of Aspen Aerogels shares are controlled by hedge funds. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Spring Creek Capital, LLC is currently the largest shareholder, with 10% of shares outstanding. George Kaiser Family Foundation, Endowment Arm is the second largest shareholder owning 9.6% of common stock, and Oaktop Capital Management II, L.P. holds about 8.9% of the company stock. In addition, we found that Donald Young, the CEO has 1.6% of the shares allocated to their name.

On further inspection, we found that more than half the company's shares are owned by the top 8 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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 are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Aspen Aerogels

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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.

Shareholders would probably be interested to learn that insiders own shares in Aspen Aerogels, Inc.. This is a big company, so it is good to see this level of alignment. Insiders own US$58m worth of shares (at current prices). Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

With a 12% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Aspen Aerogels. 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 Aspen Aerogels better, we need to consider many other factors. For instance, we've identified 3 warning signs for Aspen Aerogels (1 is a bit unpleasant) 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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