Institutional investors may adopt severe steps after Mesa Air Group, Inc.'s (NASDAQ:MESA) latest 13% drop adds to a year losses

By
Simply Wall St
Published
April 11, 2022
NasdaqGS:MESA
Source: Shutterstock

To get a sense of who is truly in control of Mesa Air Group, Inc. (NASDAQ:MESA), it is important to understand the ownership structure of the business. With 53% stake, institutions possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, institutional investors endured the highest losses last week after market cap fell by US$20m. This set of investors may especially be concerned about the current loss, which adds to a one-year loss of 71% for shareholders. Often called “market makers”, institutions wield significant power in influencing the price dynamics of any stock. Hence, if weakness in Mesa Air Group's share price continues, institutional investors may feel compelled to sell the stock, which might not be ideal for individual investors.

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

Check out our latest analysis for Mesa Air Group

ownership-breakdown
NasdaqGS:MESA Ownership Breakdown April 11th 2022

What Does The Institutional Ownership Tell Us About Mesa Air Group?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

As you can see, institutional investors have a fair amount of stake in Mesa Air 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. 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 Mesa Air Group's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
NasdaqGS:MESA Earnings and Revenue Growth April 11th 2022

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 Mesa Air Group. The company's largest shareholder is Ronald Burkle, with ownership of 8.2%. With 6.8% and 5.0% of the shares outstanding respectively, BlackRock, Inc. and Royce & Associates, LP are the second and third largest shareholders. Additionally, the company's CEO Jonathan Ornstein directly holds 1.6% of the total shares outstanding.

Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 21 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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 Mesa Air Group

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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 insiders own a significant proportion of Mesa Air Group, Inc.. Insiders have a US$16m stake in this US$135m business. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 35% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Mesa Air Group. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

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. Be aware that Mesa Air Group is showing 2 warning signs in our investment analysis , and 1 of those shouldn't be ignored...

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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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