Tootsie Roll Industries, Inc. (NYSE:TR) CEO Ellen Gordon's holdings dropped 3.7% in value as a result of the recent pullback

Key Insights

• Significant insider control over Tootsie Roll Industries implies vested interests in company growth
• 54% of the company is held by a single shareholder (Ellen Gordon)
• Institutional ownership in Tootsie Roll Industries is 16%

To get a sense of who is truly in control of Tootsie Roll Industries, Inc. (NYSE:TR), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual insiders with 65% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And last week, insiders endured the biggest losses as the stock fell by 3.7%.

Let's delve deeper into each type of owner of Tootsie Roll Industries, beginning with the chart below.

Check out our latest analysis for Tootsie Roll Industries

What Does The Institutional Ownership Tell Us About Tootsie Roll Industries?

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.

Tootsie Roll Industries 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. 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 Tootsie Roll Industries' historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Tootsie Roll Industries. With a 54% stake, CEO Ellen Gordon is the largest shareholder. This implies that they possess majority interests and have significant control over the company. Investors usually consider it a good sign when the company leadership has such a significant stake, as this is widely perceived to increase the chance that the management will act in the best interests of the company. With 7.7% and 3.2% of the shares outstanding respectively, Leigh Weiner and Virginia Gordon are the second and third largest shareholders. Interestingly, the third-largest shareholder, Virginia Gordon is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. 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 Tootsie Roll Industries

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.

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 that insiders own more than half the Tootsie Roll Industries, Inc. stock. This gives them a lot of power. Given it has a market cap of US$2.3b, that means insiders have a whopping US$1.5b worth of shares in their own names. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if they have been selling down their stake.

General Public Ownership

With a 19% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Tootsie Roll Industries. 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.

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.

I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.