After losing 7.6% in the past year, Fastly, Inc. (NYSE:FSLY) institutional owners must be relieved by the recent gain

Key Insights

• Institutions' substantial holdings in Fastly implies that they have significant influence over the company's share price
• The top 16 shareholders own 50% of the company
• Insiders have been selling lately

A look at the shareholders of Fastly, Inc. (NYSE:FSLY) can tell us which group is most powerful. We can see that institutions own the lion's share in the company with 60% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Last week's US$234m market cap gain would probably be appreciated by institutional investors, especially after a year of 7.6% losses.

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

Check out our latest analysis for Fastly

What Does The Institutional Ownership Tell Us About Fastly?

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.

Fastly already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Fastly's historic earnings and revenue below, but keep in mind there's always more to the story.

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Hedge funds don't have many shares in Fastly. The company's largest shareholder is The Vanguard Group, Inc., with ownership of 9.2%. Meanwhile, the second and third largest shareholders, hold 8.1% and 7.0%, of the shares outstanding, respectively. Artur Bergman, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board. Furthermore, CEO Todd Nightingale is the owner of 0.9% of the company's shares.

After doing some more digging, we found that the top 16 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

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

Insider Ownership Of Fastly

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Shareholders would probably be interested to learn that insiders own shares in Fastly, Inc.. This is a big company, so it is good to see this level of alignment. Insiders own US$175m worth of shares (at current prices). If you would like to explore the question of insider alignment, you can click here to see if insiders have been buying or selling.

General Public Ownership

With a 31% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Fastly. 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. Take risks for example - Fastly has 4 warning signs we think 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.