In This Article:
A look at the shareholders of Calix Limited (ASX:CXL) 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. 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 AU$103m, Calix is a small cap stock, so it might not be well known by many institutional investors. Our analysis of the ownership of the company, below, shows that institutions own shares in the company. We can zoom in on the different ownership groups, to learn more about CXL.
See our latest analysis for Calix
What Does The Institutional Ownership Tell Us About Calix?
Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.
Calix already has institutions on the share registry. Indeed, they own 25% of 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Calix, (below). Of course, keep in mind that there are other factors to consider, too.
It looks like hedge funds own 15% of Calix shares. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. There is some analyst coverage of the stock, but it could still become more well known, with time.
Insider Ownership Of Calix
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.
Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.
It seems insiders own a significant proportion of Calix Limited. It has a market capitalization of just AU$103m, and insiders have AU$39m worth of shares in their own names. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.