TROOPS, Inc.'s (NASDAQ:TROO) top holders are insiders and they are likely disappointed by the recent 17% drop

Key Insights

• Insiders appear to have a vested interest in TROOPS' growth, as seen by their sizeable ownership
• The top 2 shareholders own 51% of the company
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

To get a sense of who is truly in control of TROOPS, Inc. (NASDAQ:TROO), it is important to understand the ownership structure of the business. We can see that individual insiders own the lion's share in the company with 52% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, insiders as a group endured the highest losses after market cap fell by US$31m.

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

See our latest analysis for TROOPS

What Does The Lack Of Institutional Ownership Tell Us About TROOPS?

Small companies that are not very actively traded often lack institutional investors, but it's less common to see large companies without them.

There are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at the company. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. TROOPS' earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.

TROOPS is not owned by hedge funds. Our data shows that Kai Kai Kwok is the largest shareholder with 29% of shares outstanding. In comparison, the second and third largest shareholders hold about 23% and 0.6% of the stock.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of TROOPS

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.

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.

It seems that insiders own more than half the TROOPS, Inc. stock. This gives them a lot of power. Given it has a market cap of US$163m, that means they have US$84m worth of shares. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

With a 48% ownership, the general public, mostly comprising of individual investors, have some degree of sway over TROOPS. 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. Consider risks, for instance. Every company has them, and we've spotted 3 warning signs for TROOPS you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.