Insiders were the key beneficiaries as Fitell Corporation's (NASDAQ:FTEL) market cap rises to US$102m

Key Insights

• Insiders appear to have a vested interest in Fitell's growth, as seen by their sizeable ownership
• 58% of the company is held by a single shareholder (Jieting Zhao)
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

Every investor in Fitell Corporation (NASDAQ:FTEL) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 58% to be precise, is individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).

Clearly, insiders benefitted the most after the company's market cap rose by US$26m last week.

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

View our latest analysis for Fitell

What Does The Lack Of Institutional Ownership Tell Us About Fitell?

Small companies that are not very actively traded often lack institutional investors, but it's less common to see large companies without them.

There are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at the company. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Fitell's earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.

We note that hedge funds don't have a meaningful investment in Fitell. Jieting Zhao is currently the largest shareholder, with 58% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. Citadel Advisors LLC is the second largest shareholder owning 0.1% of common stock, and Geode Capital Management, LLC holds about 0.03% of the company stock.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Fitell

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 the majority of Fitell Corporation. This means they can collectively make decisions for the company. That means they own US$59m worth of shares in the US$102m company. That's quite meaningful. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they have been buying or selling.

General Public Ownership

With a 42% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Fitell. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

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. For example, we've discovered 3 warning signs for Fitell (2 don't sit too well with us!) that you should be aware of before investing here.

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.