Is Computer Programs and Systems, Inc. (NASDAQ:CPSI) Popular Amongst Institutions?

By
Simply Wall St
Published
February 02, 2021
NasdaqGS:CPSI
Source: Shutterstock

Every investor in Computer Programs and Systems, Inc. (NASDAQ:CPSI) should be aware of the most powerful shareholder groups. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. We also tend to see lower insider ownership in companies that were previously publicly owned.

Computer Programs and Systems is a smaller company with a market capitalization of US$442m, so it may still be flying under the radar of many institutional investors. In the chart below, we can see that institutions own shares in the company. Let's delve deeper into each type of owner, to discover more about Computer Programs and Systems.

View our latest analysis for Computer Programs and Systems

ownership-breakdown
NasdaqGS:CPSI Ownership Breakdown February 3rd 2021

What Does The Institutional Ownership Tell Us About Computer Programs and Systems?

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.

Computer Programs and Systems already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Computer Programs and Systems, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
NasdaqGS:CPSI Earnings and Revenue Growth February 3rd 2021

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Hedge funds don't have many shares in Computer Programs and Systems. Looking at our data, we can see that the largest shareholder is BlackRock, Inc. with 14% of shares outstanding. River Road Asset Management, LLC is the second largest shareholder owning 8.1% of common stock, and The Vanguard Group, Inc. holds about 6.3% of the company stock. Additionally, the company's CEO John Douglas directly holds 1.7% of the total shares outstanding.

After doing some more digging, we found that the top 13 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Computer Programs and Systems

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 Computer Programs and Systems, Inc.. As individuals, the insiders collectively own US$22m worth of the US$442m company. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.

General Public Ownership

With a 13% ownership, the general public have some degree of sway over Computer Programs and Systems. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should be aware of the 2 warning signs we've spotted with Computer Programs and Systems .

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. 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.
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