Insiders of Sinclair, Inc. (NASDAQ:SBGI) have had a great week after last week's US$60m gain and they haven't stopped buying

Key Insights

• Sinclair's significant insider ownership suggests inherent interests in company's expansion
• The top 6 shareholders own 53% of the company
• Insiders have bought recently

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To get a sense of who is truly in control of Sinclair, Inc. (NASDAQ:SBGI), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 44% to be precise, is individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).

Our data shows that insiders recently bought shares in the company and they were rewarded after market cap rose US$60m last week.

In the chart below, we zoom in on the different ownership groups of Sinclair.

Check out our latest analysis for Sinclair

What Does The Institutional Ownership Tell Us About Sinclair?

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.

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

Hedge funds don't have many shares in Sinclair. From our data, we infer that the largest shareholder is David Smith (who also holds the title of Top Key Executive) with 16% of shares outstanding. Its usually considered a good sign when insiders own a significant number of shares in the company, and in this case, we're glad to see a company insider play the role of a key stakeholder. J. Smith is the second largest shareholder owning 9.9% of common stock, and Robert Smith holds about 9.4% of the company stock. Note that two of the top three shareholders are also Secretary and Member of the Board of Directors, respectively, once again pointing to significant ownership by company insiders. Furthermore, CEO Christopher Ripley is the owner of 1.5% of the company's shares.

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 are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Sinclair

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. 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 information suggests that insiders maintain a significant holding in Sinclair, Inc.. It has a market capitalization of just US$982m, and insiders have US$431m worth of shares in their own names. 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

With a 13% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Sinclair. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

Our data indicates that Private Companies hold 3.3%, of the company's shares. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Sinclair (at least 2 which can't be ignored) , 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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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.