Do Insiders Own Shares In Nxt-ID, Inc. (NASDAQ:NXTD)?

January 13, 2020
  •  Updated
August 16, 2022
NasdaqCM:LGMK
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If you want to know who really controls Nxt-ID, Inc. (NASDAQ:NXTD), then you'll have to look at the makeup of its share registry. 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.

Nxt-ID is a smaller company with a market capitalization of US$13m, so it may still be flying under the radar of many institutional investors. In the chart below, we can see that institutions are not really that prevalent on the share registry. We can zoom in on the different ownership groups, to learn more about Nxt-ID.

View our latest analysis for Nxt-ID

NasdaqCM:NXTD Ownership Summary, January 14th 2020
NasdaqCM:NXTD Ownership Summary, January 14th 2020

What Does The Institutional Ownership Tell Us About Nxt-ID?

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.

Since institutions own under 5% of Nxt-ID, many may not have spent much time considering the stock. But it's clear that some have; and they liked it enough to buy in. If the business gets stronger from here, we could see a situation where more institutions are keen to buy. 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.

NasdaqCM:NXTD Income Statement, January 14th 2020
NasdaqCM:NXTD Income Statement, January 14th 2020

Our data indicates that hedge funds own 6.9% of Nxt-ID. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Our data shows that Fondren Management LP is the largest shareholder with 6.9% of shares outstanding. With 4.2% and 4.0% of the shares outstanding respectively, WorldVentures Marketing, LLC and Michael Orlando are the second and third largest shareholders. Michael Orlando also happens to hold the title of Member of the Board of Directors.

A deeper look at our ownership data shows that the top 17 shareholders collectively hold less than 50% of the register, suggesting a large group of small holders where no one share holder has a majority.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Nxt-ID

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.

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 a reasonable proportion of Nxt-ID, Inc.. Insiders have a US$1.4m stake in this US$13m business. 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, mostly retail investors, hold a substantial 72% stake in NXTD, suggesting it is a fairly popular stock. This level of ownership gives retail investors the power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Private Company Ownership

It seems that Private Companies own 6.2%, of the NXTD stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Nxt-ID , and understanding them should be part of your investment process.

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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.

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About NasdaqCM:LGMK

LogicMark

LogicMark, Inc. offers personal emergency response systems (PERS), health communications devices, and Internet of Things (IoT) technology that creates a connected care platform in the United States.

Flawless balance sheet and slightly overvalued.