While institutions invested in FONAR Corporation (NASDAQ:FONR) benefited from last week's 11% gain, individual investors stood to gain the most

Key Insights

• FONAR's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 22 shareholders own 50% of the company
• Institutions own 44% of FONAR

Every investor in FONAR Corporation (NASDAQ:FONR) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 47% to be precise, is individual investors. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 11% increase in the stock price last week, individual investors profited the most, but institutions who own 44% stock also stood to gain from the increase.

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

View our latest analysis for FONAR

What Does The Institutional Ownership Tell Us About FONAR?

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.

As you can see, institutional investors have a fair amount of stake in FONAR. 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. 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 FONAR, (below). Of course, keep in mind that there are other factors to consider, too.

It looks like hedge funds own 5.2% of FONAR shares. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Looking at our data, we can see that the largest shareholder is Kayne Anderson Rudnick Investment Management, LLC with 9.8% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 6.1% and 5.9%, of the shares outstanding, respectively. Furthermore, CEO Timothy Damadian is the owner of 3.2% of the company's shares.

After doing some more digging, we found that the top 22 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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of FONAR

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.

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.

We can report that insiders do own shares in FONAR Corporation. It has a market capitalization of just US$105m, and insiders have US$4.4m worth of shares, in their own names. Some would say this shows alignment of interests between shareholders and the board, though we generally prefer to see bigger insider holdings. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public-- including retail investors -- own 47% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

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. Case in point: We've spotted 1 warning sign for FONAR you should be aware of.

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.