Here's What Applied Optoelectronics, Inc.'s (NASDAQ:AAOI) Shareholder Ownership Structure Looks Like

Every investor in Applied Optoelectronics, Inc. (NASDAQ:AAOI) 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.

Applied Optoelectronics is a smaller company with a market capitalization of US$236m, so it may still be flying under the radar of many institutional investors. Taking a look at our data on the ownership groups (below), it seems that institutional investors have bought into the company. Let's take a closer look to see what the different types of shareholders can tell us about Applied Optoelectronics.

View our latest analysis for Applied Optoelectronics

What Does The Institutional Ownership Tell Us About Applied Optoelectronics?

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.

As you can see, institutional investors have a fair amount of stake in Applied Optoelectronics. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Applied Optoelectronics' earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Applied Optoelectronics. BlackRock, Inc. is currently the largest shareholder, with 15% of shares outstanding. In comparison, the second and third largest shareholders hold about 6.4% and 2.6% of the stock. Additionally, the company's CEO Chih-Hsiang Lin directly holds 2.3% of the total shares outstanding.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

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

Insider Ownership Of Applied Optoelectronics

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

Our most recent data indicates that insiders own some shares in Applied Optoelectronics, Inc.. It has a market capitalization of just US$236m, and insiders have US$13m worth of shares, in their own names. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public holds a 46% stake in Applied Optoelectronics. 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 - Applied Optoelectronics has 3 warning signs (and 1 which is concerning) we think you should know about.

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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