IronNet, Inc.'s (NYSE:IRNT) market cap surged US$46m last week, individual investors who have a lot riding on the company were rewarded

By
Simply Wall St
Published
March 22, 2022
NYSE:IRNT
Source: Shutterstock

If you want to know who really controls IronNet, Inc. (NYSE:IRNT), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 42% to be precise, is individual investors. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, individual investors were the biggest beneficiaries of last week’s 13% gain.

Let's delve deeper into each type of owner of IronNet, beginning with the chart below.

See our latest analysis for IronNet

ownership-breakdown
NYSE:IRNT Ownership Breakdown March 22nd 2022

What Does The Institutional Ownership Tell Us About IronNet?

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 IronNet. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 IronNet, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
NYSE:IRNT Earnings and Revenue Growth March 22nd 2022

IronNet is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is the CEO Keith Alexander with 13% of shares outstanding. In comparison, the second and third largest shareholders hold about 12% and 8.0% of the stock.

On further inspection, we found that more than half the company's shares are owned by the top 8 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of IronNet

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.

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.

It seems insiders own a significant proportion of IronNet, Inc.. Insiders own US$65m worth of shares in the US$387m company. 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

With a 42% ownership, the general public, mostly comprising of individual investors, have some degree of sway over IronNet. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

With an ownership of 27%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Private Company Ownership

We can see that Private Companies own 4.1%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand IronNet better, we need to consider many other factors. For example, we've discovered 5 warning signs for IronNet (2 are significant!) that you should be aware of before investing here.

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.

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