Insiders were the biggest winners as Crexendo, Inc.'s (NASDAQ:CXDO) market cap grew by US$16m last week

Key Insights

• Insiders appear to have a vested interest in Crexendo's growth, as seen by their sizeable ownership
• 51% of the business is held by the top 6 shareholders
• Institutions own 19% of Crexendo

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Every investor in Crexendo, Inc. (NASDAQ:CXDO) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 49% 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$16m last week.

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

See our latest analysis for Crexendo

What Does The Institutional Ownership Tell Us About Crexendo?

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.

As you can see, institutional investors have a fair amount of stake in Crexendo. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Crexendo, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Crexendo. The company's largest shareholder is Steven Mihaylo, with ownership of 40%. In comparison, the second and third largest shareholders hold about 2.6% and 2.1% of the stock. In addition, we found that Jeffrey Korn, the CEO has 0.9% of the shares allocated to their name.

We also observed that the top 6 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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Crexendo

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

It seems insiders own a significant proportion of Crexendo, Inc.. It has a market capitalization of just US$133m, and insiders have US$65m worth of shares in their own names. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 33% stake in Crexendo. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we've identified 1 warning sign for Crexendo that you should be aware of.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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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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.