Insiders with their considerable ownership were the key benefactors as Crexendo, Inc. (NASDAQ:CXDO) touches US$199m market cap

Key Insights

• Insiders appear to have a vested interest in Crexendo's growth, as seen by their sizeable ownership
• 50% of the business is held by the top 8 shareholders
• Institutional ownership in Crexendo is 25%

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Every investor in Crexendo, Inc. (NASDAQ:CXDO) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 45% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, insiders scored the highest last week as the company hit US$199m market cap following a 10% gain in the stock.

Let's take a closer look to see what the different types of shareholders can tell us about Crexendo.

See our latest analysis for Crexendo

What Does The Institutional Ownership Tell Us About Crexendo?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

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. 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 Crexendo's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Crexendo. Steven Mihaylo is currently the company's largest shareholder with 37% of shares outstanding. Essex Investment Management Company, LLC is the second largest shareholder owning 2.4% of common stock, and BlackRock, Inc. holds about 2.1% of the company stock. Furthermore, CEO Jeffrey Korn is the owner of 0.8% of the company's shares.

We did some more digging and found that 8 of the top shareholders account for roughly 50% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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

Insider Ownership Of Crexendo

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 Crexendo, Inc.. It has a market capitalization of just US$199m, and insiders have US$89m worth of shares in their own names. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 31% stake in the company, and hence can't easily be ignored. 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.

I always like to check for a history of revenue growth. You can too, by accessing this free chart of historic revenue and earnings in this detailed graph.

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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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.