Hedge funds investors have a lot riding on Pro-Dex, Inc. (NASDAQ:PDEX) with 39% ownership

Key Insights

• Significantly high institutional ownership implies Pro-Dex's stock price is sensitive to their trading actions
• The top 6 shareholders own 51% of the company
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

If you want to know who really controls Pro-Dex, Inc. (NASDAQ:PDEX), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are hedge funds with 39% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And things are looking up for hedge funds investors after the company gained US$10m in market cap last week. One-year return to shareholders is currently 72% and last week’s gain was the icing on the cake.

Let's delve deeper into each type of owner of Pro-Dex, beginning with the chart below.

See our latest analysis for Pro-Dex

What Does The Institutional Ownership Tell Us About Pro-Dex?

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.

As you can see, institutional investors have a fair amount of stake in Pro-Dex. 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 Pro-Dex's historic earnings and revenue below, but keep in mind there's always more to the story.

It looks like hedge funds own 39% of Pro-Dex shares. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. AO Partners Llc is currently the largest shareholder, with 28% of shares outstanding. In comparison, the second and third largest shareholders hold about 11% and 3.7% of the stock. In addition, we found that Richard Van Kirk, the CEO has 3.0% of the shares allocated to their name.

On further inspection, we found that more than half the company's shares are owned by the top 6 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Pro-Dex

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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 see that insiders own shares in Pro-Dex, Inc.. It has a market capitalization of just US$100m, and insiders have US$7.4m 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 38% stake in the company, and hence can't easily be ignored. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Pro-Dex better, we need to consider many other factors. For instance, we've identified 2 warning signs for Pro-Dex that you should be aware of.

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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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.