Stock Analysis

Is Alpha and Omega Semiconductor Limited (NASDAQ:AOSL) Popular Amongst Insiders?

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NasdaqGS:AOSL
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If you want to know who really controls Alpha and Omega Semiconductor Limited (NASDAQ:AOSL), then you'll have to look at the makeup of its share registry. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. I quite like to see at least a little bit of insider ownership. As Charlie Munger said 'Show me the incentive and I will show you the outcome.

Alpha and Omega Semiconductor isn't enormous, but it's not particularly small either. It has a market capitalization of US$1.0b, which means it would generally expect to see some institutions on the share registry. Taking a look at our data on the ownership groups (below), it seems that institutions are noticeable on the share registry. Let's delve deeper into each type of owner, to discover more about Alpha and Omega Semiconductor.

Check out our latest analysis for Alpha and Omega Semiconductor

ownership-breakdown
NasdaqGS:AOSL Ownership Breakdown February 18th 2021

What Does The Institutional Ownership Tell Us About Alpha and Omega Semiconductor?

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.

Alpha and Omega Semiconductor 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Alpha and Omega Semiconductor's historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
NasdaqGS:AOSL Earnings and Revenue Growth February 18th 2021

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. We note that hedge funds don't have a meaningful investment in Alpha and Omega Semiconductor. With a 16% stake, CEO Mike Fushing Chang is the largest shareholder. With 7.7% and 5.6% of the shares outstanding respectively, Dimensional Fund Advisors L.P. and BlackRock, Inc. are the second and third largest shareholders.

We also observed that the top 9 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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

Insider Ownership Of Alpha and Omega Semiconductor

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 information suggests that insiders maintain a significant holding in Alpha and Omega Semiconductor Limited. Insiders own US$205m worth of shares in the US$1.0b company. That's quite meaningful. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

With a 22% ownership, the general public have some degree of sway over Alpha and Omega Semiconductor. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Alpha and Omega Semiconductor is showing 2 warning signs in our investment analysis , you should know about...

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

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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