I am going to take a deep dive into Gyrodyne LLC’s (NASDAQ:GYRO) most recent ownership structure, not a frequent subject of discussion among individual investors. When it comes to ownership structure of a company, the impact has been observed in both the long-and short-term performance of shares. The effect of an active institutional investor with a similar ownership as a passive pension-fund can be vastly different on a company’s corporate governance and accountability to shareholders. While this may be more interesting for long-term investors, short-term investors can also benefit by paying attention to when these institutions trade in order to take advantage of the heightened volatility. Therefore, it is beneficial for us to examine GYRO’s ownership structure in more detail.See our latest analysis for Gyrodyne
Institutional OwnershipInstitutional investors are one of the largest group of market participants and their buy-sell decisions on a company’s stock can significantly impact prices, more so, when there are relatively small amounts of shares available on the market to trade. GYRO has institutions holding a stake of just 7.04%, which should not be much of a concern in terms of excessive price volatility. Another important owner type is hedge funds, who tend to be investors with short-term horizons. With 37.94% ownership in GYRO, they seem to have a significant enough holding to cause a spike in volatility in the short run. I am going to further examine the stock’s other major shareholders to figure out how they can affect the company’s investment profile for the long-term investor.
Insider OwnershipAnother important group of shareholders are company insiders. Insider ownership has to do more with how the company is managed and less to do with the direct impact of the magnitude of shares trading on the market. 19.42% ownership of GYRO insiders is large enough to make an impact on shareholder returns. In general, this level of insider ownership has negatively affected underperforming (consistently low PE ratio) companies and positively affected the companies that outperform (consistently high PE ratio). Another aspect of insider ownership is to learn about their recent transactions. While insider buying is possibly a sign of a positive outlook for the company, selling doesn’t necessarily indicate a negative outlook as they may be selling to meet personal financial needs.
General Public OwnershipThe general public holds a substantial 35.60% stake in GYRO, making it a highly popular stock among retail investors. With this size of ownership, retail investors can collectively play a role in major company policies that affect shareholders returns, including executive remuneration and the appointment of directors. They can also exercise the power to decline an acquisition or merger that may not improve profitability.
While institutional ownership in GYRO is low, active hedge funds still have a significant stake in the company. The participation of these active investors has been linked to the volatile nature of share prices. An investment in GYRO should come with enough margin of safety in order to avoid significant dips in shareholding value. However, if you are building an investment case for GYRO, ownership structure alone should not dictate your decision to buy or sell the stock. Rather, you should be looking at fundamental drivers such as Gyrodyne’s past track record and financial health. I highly recommend you to complete your research by taking a look at the following:
- 1. Financial Health: Is GYRO’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- 2. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.