With a 68% stake, Tootsie Roll Industries, Inc. (NYSE:TR) insiders have a lot riding on the company

Key Insights

• Insiders appear to have a vested interest in Tootsie Roll Industries' growth, as seen by their sizeable ownership
• Ellen Gordon owns 57% of the company
• 16% of Tootsie Roll Industries is held by Institutions

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Every investor in Tootsie Roll Industries, Inc. (NYSE:TR) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 68% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

With such a notable stake in the company, insiders would be highly incentivised to make value accretive decisions.

In the chart below, we zoom in on the different ownership groups of Tootsie Roll Industries.

View our latest analysis for Tootsie Roll Industries

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

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.

We can see that Tootsie Roll Industries does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Tootsie Roll Industries' earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Tootsie Roll Industries. Looking at our data, we can see that the largest shareholder is the CEO Ellen Gordon with 57% of shares outstanding. 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. Meanwhile, the second and third largest shareholders, hold 7.9% and 3.3%, of the shares outstanding, respectively. 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

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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 own more than half of Tootsie Roll Industries, Inc.. This gives them effective control of the company. That means insiders have a very meaningful US$1.5b stake in this US$2.2b business. It is good to see this level of investment. You can check here to see if those insiders have been selling any of their shares.

General Public Ownership

With a 16% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Tootsie Roll Industries. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

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 access this interactive graph of past earnings, revenue and cash flow, for free.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.