Seneca Foods Corporation's (NASDAQ:SENE.A) large institutional owners must be happy as stock continues to impress, up 11% over the past week

By
Simply Wall St
Published
May 14, 2022
NasdaqGS:SENE.A
Source: Shutterstock

If you want to know who really controls Seneca Foods Corporation (NASDAQ:SENE.A), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are institutions with 61% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And things are looking up for institutional investors after the company gained US$47m in market cap last week. The one-year return on investment is currently 17% and last week's gain would have been more than welcomed.

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

View our latest analysis for Seneca Foods

ownership-breakdown
NasdaqGS:SENE.A Ownership Breakdown May 14th 2022

What Does The Institutional Ownership Tell Us About Seneca Foods?

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.

Seneca Foods already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Seneca Foods' historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
NasdaqGS:SENE.A Earnings and Revenue Growth May 14th 2022

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Hedge funds don't have many shares in Seneca Foods. BlackRock, Inc. is currently the largest shareholder, with 14% of shares outstanding. In comparison, the second and third largest shareholders hold about 12% and 7.7% of the stock.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Seneca Foods

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.

We can see that insiders own shares in Seneca Foods Corporation. In their own names, insiders own US$29m worth of stock in the US$476m company. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 20% stake in Seneca Foods. 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 Seneca Foods better, we need to consider many other factors. For example, we've discovered 1 warning sign for Seneca Foods that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this 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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