Could The Soliton, Inc. (NASDAQ:SOLY) Ownership Structure Tell Us Something Useful?

By
Simply Wall St
Published
March 15, 2021
NasdaqCM:SOLY
Source: Shutterstock

A look at the shareholders of Soliton, Inc. (NASDAQ:SOLY) can tell us which group is most powerful. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. I quite like to see at least a little bit of insider ownership. As Charlie Munger said 'Show me the incentive and I will show you the outcome.

Soliton is a smaller company with a market capitalization of US$312m, 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 Soliton.

View our latest analysis for Soliton

ownership-breakdown
NasdaqCM:SOLY Ownership Breakdown March 15th 2021

What Does The Institutional Ownership Tell Us About Soliton?

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 Soliton does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Soliton's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
NasdaqCM:SOLY Earnings and Revenue Growth March 15th 2021

Soliton is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Remeditex Ventures, LLC with 43% of shares outstanding. In comparison, the second and third largest shareholders hold about 4.1% and 3.4% of the stock. Walter Klemp, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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 are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Soliton

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.

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.

Our most recent data indicates that insiders own some shares in Soliton, Inc.. As individuals, the insiders collectively own US$26m worth of the US$312m 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 33% ownership, the general public have some degree of sway over Soliton. 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.

Private Equity Ownership

With a stake of 43%, private equity firms could influence the Soliton board. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Soliton better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 3 warning signs for Soliton you should know about.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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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