Stock Analysis

Could The Natural Alternatives International, Inc. (NASDAQ:NAII) Ownership Structure Tell Us Something Useful?

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NasdaqGM:NAII
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A look at the shareholders of Natural Alternatives International, Inc. (NASDAQ:NAII) can tell us which group is most powerful. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in 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.

Natural Alternatives International is not a large company by global standards. It has a market capitalization of US$109m, which means it wouldn't have the attention of many institutional investors. Our analysis of the ownership of the company, below, shows that institutions are noticeable on the share registry. Let's delve deeper into each type of owner, to discover more about Natural Alternatives International.

Check out our latest analysis for Natural Alternatives International

ownership-breakdown
NasdaqGM:NAII Ownership Breakdown February 12th 2021

What Does The Institutional Ownership Tell Us About Natural Alternatives International?

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.

Natural Alternatives International already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Natural Alternatives International, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
NasdaqGM:NAII Earnings and Revenue Growth February 11th 2021

It would appear that 8.3% of Natural Alternatives International 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. With a 13% stake, CEO Mark LeDoux is the largest shareholder. Meanwhile, the second and third largest shareholders, hold 8.8% and 8.1%, of the shares outstanding, respectively.

After doing some more digging, we found that the top 13 have the combined ownership of 51% in the company, suggesting that no single shareholder has significant control over 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. 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 Natural Alternatives International

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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our most recent data indicates that insiders own a reasonable proportion of Natural Alternatives International, Inc.. It has a market capitalization of just US$109m, and insiders have US$24m worth of shares in their own names. 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

With a 47% ownership, the general public have some degree of sway over Natural Alternatives International. 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:

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. Take risks for example - Natural Alternatives International has 4 warning signs (and 1 which is a bit unpleasant) we think you should know about.

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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