What Is The Ownership Structure Like For Ideanomics, Inc. (NASDAQ:IDEX)?

Every investor in Ideanomics, Inc. (NASDAQ:IDEX) should be aware of the most powerful shareholder groups. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. 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.

Ideanomics has a market capitalization of US$1.6b, so we would expect some institutional investors to have noticed the stock. Taking a look at our data on the ownership groups (below), it seems that institutional investors have not yet purchased much of the company. We can zoom in on the different ownership groups, to learn more about Ideanomics.

Check out our latest analysis for Ideanomics

What Does The Institutional Ownership Tell Us About Ideanomics?

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.

Less than 5% of Ideanomics is held by institutional investors. This suggests that some funds have the company in their sights, but many have not yet bought shares in it. If the company is growing earnings, that may indicate that it is just beginning to catch the attention of these deep-pocketed investors. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.

Hedge funds don't have many shares in Ideanomics. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Ideanomics' case, its Top Key Executive, Zheng Wu, is the largest shareholder, holding 9.8% of shares outstanding. With 3.5% and 2.3% of the shares outstanding respectively, Shane B. McMahon and GT Group are the second and third largest shareholders. Interestingly, the second-largest shareholder, Shane B. McMahon is also Top Key Executive, again, pointing towards strong insider ownership amongst the company's top shareholders.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. As far I can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Ideanomics

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

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our most recent data indicates that insiders own some shares in Ideanomics, Inc.. This is a big company, so it is good to see this level of alignment. Insiders own US$147m worth of shares (at current prices). Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, with a 50% stake in the company, will not 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:

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. Be aware that Ideanomics is showing 3 warning signs in our investment analysis , and 2 of those are a bit concerning...

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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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