Institutional owners may consider drastic measures as Quotient Technology Inc.'s (NYSE:QUOT) recent US$73m drop adds to long-term losses

By
Simply Wall St
Published
March 15, 2022
NYSE:QUOT
Source: Shutterstock

If you want to know who really controls Quotient Technology Inc. (NYSE:QUOT), then you'll have to look at the makeup of its share registry. With 64% stake, institutions possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

And institutional investors endured the highest losses after the company's share price fell by 12% last week. Needless to say, the recent loss which further adds to the one-year loss to shareholders of 67% might not go down well especially with this category of shareholders. Also referred to as "smart money", institutions have a lot of sway over how a stock's price moves. Hence, if weakness in Quotient Technology's share price continues, institutional investors may feel compelled to sell the stock, which might not be ideal for individual investors.

Let's delve deeper into each type of owner of Quotient Technology, beginning with the chart below.

Check out our latest analysis for Quotient Technology

ownership-breakdown
NYSE:QUOT Ownership Breakdown March 15th 2022

What Does The Institutional Ownership Tell Us About Quotient Technology?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

Quotient Technology 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Quotient Technology's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
NYSE:QUOT Earnings and Revenue Growth March 15th 2022

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. It would appear that 20% of Quotient Technology shares are controlled by hedge funds. 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. Our data shows that The Vanguard Group, Inc. is the largest shareholder with 8.5% of shares outstanding. For context, the second largest shareholder holds about 7.7% of the shares outstanding, followed by an ownership of 6.4% by the third-largest shareholder. Furthermore, CEO Steven Boal is the owner of 2.3% of the company's shares.

We did some more digging and found that 9 of the top shareholders account for roughly 52% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Quotient Technology

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

Shareholders would probably be interested to learn that insiders own shares in Quotient Technology Inc.. In their own names, insiders own US$25m worth of stock in the US$528m company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 12% stake in the company, and hence can't easily be ignored. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example - Quotient Technology has 3 warning signs we think you should be aware of.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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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