Stock Analysis

Is Repro Med Systems, Inc.'s (NASDAQ:KRMD) Shareholder Ownership Skewed Towards Insiders?

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NasdaqCM:KRMD
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Every investor in Repro Med Systems, Inc. (NASDAQ:KRMD) should be aware of the most powerful shareholder groups. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, 'Don’t tell me what you think, tell me what you have in your portfolio.

Repro Med Systems is not a large company by global standards. It has a market capitalization of US$191m, which means it wouldn't have the attention of many institutional investors. In the chart below, we can see that institutions are noticeable on the share registry. We can zoom in on the different ownership groups, to learn more about Repro Med Systems.

View our latest analysis for Repro Med Systems

ownership-breakdown
NasdaqCM:KRMD Ownership Breakdown February 22nd 2021

What Does The Institutional Ownership Tell Us About Repro Med Systems?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

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

earnings-and-revenue-growth
NasdaqCM:KRMD Earnings and Revenue Growth February 22nd 2021

It would appear that 27% of Repro Med Systems shares are controlled by hedge funds. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Our data shows that Horton Capital Partners, LLC is the largest shareholder with 27% of shares outstanding. First Light Asset Management, LLC is the second largest shareholder owning 13% of common stock, and Kathy Frommer holds about 3.9% of the company stock. Kathy Frommer, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

On looking further, we found that 52% of the shares are owned by the top 5 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Repro Med Systems

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.

It seems insiders own a significant proportion of Repro Med Systems, Inc.. Insiders have a US$21m stake in this US$191m business. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public holds a 27% stake in Repro Med Systems. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Repro Med Systems better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Repro Med Systems , and understanding them should be part of your investment process.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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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