To get a sense of who is truly in control of United-Guardian, Inc. (NASDAQ:UG), it is important to understand the ownership structure of the business. With 38% stake, individual investors possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
While individual investors were the group that benefitted the most from last week’s US$13m market cap gain, insiders too had a 37% share in those profits.
Let's take a closer look to see what the different types of shareholders can tell us about United-Guardian.
What Does The Institutional Ownership Tell Us About United-Guardian?
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.
United-Guardian 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 United-Guardian, (below). Of course, keep in mind that there are other factors to consider, too.
Our data indicates that hedge funds own 5.0% of United-Guardian. 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. With a 29% stake, CEO Kenneth Globus is the largest shareholder. In comparison, the second and third largest shareholders hold about 7.7% and 5.0% of the stock.
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.
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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.
Insider Ownership Of United-Guardian
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.
Our most recent data indicates that insiders own a reasonable proportion of United-Guardian, Inc.. Insiders have a US$43m stake in this US$117m business. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public, who are usually individual investors, hold a 38% stake in United-Guardian. 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.
It's always worth thinking about the different groups who own shares in a company. But to understand United-Guardian 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 United-Guardian (at least 1 which is concerning) , and understanding them should be part of your investment process.
If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.
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.
United-Guardian, Inc. manufactures and markets cosmetic ingredients, pharmaceuticals, medical lubricants, and proprietary specialty industrial products in the United States and internationally The company offers cosmetic ingredients, including LUBRAJEL, a line of water-based gel formulation for sensory enhancement, lubrication, and texture to personal care products; LUBRAJEL NATURAL for skin moisturizing; LUBRAJEL MARINE that develops natural products using naturally derived polymers; LUBRAJEL OlL NATURAL, which makes luxuriant textures without adding viscosity; LUBRAJEL TERRA, a multifunctional, moisturizing hydrogel products; LUBRASIL II SB, a formulation of LUBRAJEL; LUBRAJEL II XD; B-122, a powdered lubricant used in the manufacture of pressed powders, eyeliners, rouges, and industrial products; and ORCHID COMPLEX, an oil-soluble base for extract of fresh orchids used in fragrance products, such as perfumes and toiletries.
Flawless balance sheet second-rate dividend payer.