What Is The Ownership Structure Like For EMCORE Corporation (NASDAQ:EMKR)?

By
Simply Wall St
Published
April 17, 2021
NasdaqGM:EMKR

If you want to know who really controls EMCORE Corporation (NASDAQ:EMKR), then you'll have to look at the makeup of its share registry. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies. 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.

With a market capitalization of US$174m, EMCORE is a small cap stock, so it might not be well known by many institutional investors. In the chart below, we can see that institutions are noticeable on the share registry. We can zoom in on the different ownership groups, to learn more about EMCORE.

See our latest analysis for EMCORE

ownership-breakdown
NasdaqGM:EMKR Ownership Breakdown April 17th 2021

What Does The Institutional Ownership Tell Us About EMCORE?

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.

EMCORE 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. 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 EMCORE's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
NasdaqGM:EMKR Earnings and Revenue Growth April 17th 2021

Our data indicates that hedge funds own 7.9% of EMCORE. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. Our data shows that Cannell Capital LLC is the largest shareholder with 7.9% of shares outstanding. The second and third largest shareholders are Aigh Capital Management, LLC and Laurence Lytton, with an equal amount of shares to their name at 4.7%. Furthermore, CEO Jeffrey Rittichier is the owner of 0.7% of the company's shares.

After doing some more digging, we found that the top 15 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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of EMCORE

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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

We can see that insiders own shares in EMCORE Corporation. In their own names, insiders own US$12m worth of stock in the US$174m company. This shows at least some alignment, but I usually like to see larger insider holdings. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public holds a 41% stake in EMCORE. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand EMCORE better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for EMCORE you should be aware of.

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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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. 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.
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