CPI Card Group Inc.'s (NASDAQ:PMTS) market cap touched US$330m last week, benefiting both private equity firms who own 57% as well as institutions

Key Insights

• Significant control over CPI Card Group by private equity firms implies that the general public has more power to influence management and governance-related decisions
• 57% of the company is held by a single shareholder (Parallel49 Equity, ULC)
• 21% of CPI Card Group is held by Institutions

Every investor in CPI Card Group Inc. (NASDAQ:PMTS) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are private equity firms with 57% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Private equity firms gained the most after market cap touched US$330m last week, while institutions who own 21% also benefitted.

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

See our latest analysis for CPI Card Group

What Does The Institutional Ownership Tell Us About CPI Card Group?

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 CPI Card Group. 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. 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 CPI Card Group's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in CPI Card Group. Looking at our data, we can see that the largest shareholder is Parallel49 Equity, ULC with 57% of shares outstanding. This implies that they have majority interest control of the future of the company. With 3.1% and 2.4% of the shares outstanding respectively, The Vanguard Group, Inc. and BlackRock, Inc. are the second and third largest shareholders.

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 CPI Card Group

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.

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.

Shareholders would probably be interested to learn that insiders own shares in CPI Card Group Inc.. It has a market capitalization of just US$330m, and insiders have US$8.9m worth of shares, in their own names. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 19% stake in CPI Card Group. 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 a stake of 57%, private equity firms could influence the CPI Card Group board. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand CPI Card Group better, we need to consider many other factors. For instance, we've identified 3 warning signs for CPI Card Group (1 is concerning) that you should be aware of.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com