What Kind Of Shareholders Hold The Majority In Comtech Telecommunications Corp.'s (NASDAQ:CMTL) Shares?

By
Simply Wall St
Published
May 20, 2021
NasdaqGS:CMTL
Source: Shutterstock

A look at the shareholders of Comtech Telecommunications Corp. (NASDAQ:CMTL) can tell us which group is most powerful. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. Companies that used to be publicly owned tend to have lower insider ownership.

Comtech Telecommunications is not a large company by global standards. It has a market capitalization of US$611m, which means it wouldn't have the attention of many institutional investors. Our analysis of the ownership of the company, below, shows that institutions own shares in the company. Let's delve deeper into each type of owner, to discover more about Comtech Telecommunications.

View our latest analysis for Comtech Telecommunications

ownership-breakdown
NasdaqGS:CMTL Ownership Breakdown May 20th 2021

What Does The Institutional Ownership Tell Us About Comtech Telecommunications?

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.

We can see that Comtech Telecommunications does have institutional investors; and they hold a good portion of the company's stock. 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 Comtech Telecommunications' historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
NasdaqGS:CMTL Earnings and Revenue Growth May 20th 2021

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. Hedge funds don't have many shares in Comtech Telecommunications. The company's largest shareholder is BlackRock, Inc., with ownership of 16%. With 7.1% and 6.3% of the shares outstanding respectively, Dimensional Fund Advisors L.P. and The Vanguard Group, Inc. are the second and third largest shareholders. Furthermore, CEO Fred Kornberg is the owner of 1.5% of the company's shares.

Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 11 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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 Comtech Telecommunications

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.

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 Comtech Telecommunications Corp.. In their own names, insiders own US$16m worth of stock in the US$611m company. 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, with a 17% stake in the company, will not easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

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. Take risks for example - Comtech Telecommunications has 4 warning signs (and 1 which is significant) 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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