Yahoo Finance Dell Technologies Inc. (NYSE:DELL) insiders still own 50% despite recent sales, but recent decline may have cost them
Key Insights
Significant insider control over Dell Technologies implies vested interests in company growth
59% of the business is held by the top 2 shareholders
A look at the shareholders of Dell Technologies Inc. (NYSE:DELL) can tell us which group is most powerful. The group holding the most number of shares in the company, around 50% to be precise, is individual insiders. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
Despite selling some shares recently, insiders control a good portion of the company's stock. As a result, the group bore the brunt of last week’s US$9.9b market cap loss.
Let's take a closer look to see what the different types of shareholders can tell us about Dell Technologies.
Check out our latest analysis for Dell Technologies
What Does The Institutional Ownership Tell Us About Dell Technologies?
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.
We can see that Dell Technologies does have institutional investors; and they hold a good portion of the company's stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Dell Technologies' historic earnings and revenue below, but keep in mind there's always more to the story.
Dell Technologies is not owned by hedge funds. With a 49% stake, CEO Michael Dell is the largest shareholder. In comparison, the second and third largest shareholders hold about 9.4% and 2.3% 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 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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Dell Technologies
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.
Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.
Our information suggests that insiders own more than half of Dell Technologies Inc.. This gives them effective control of the company. Given it has a market cap of US$69b, that means insiders have a whopping US$35b worth of shares in their own names. Most would be pleased to see the board is investing alongside them. You may wish to discover if they have been buying or selling.
General Public Ownership
With a 12% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Dell Technologies. 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.
Private Equity Ownership
With an ownership of 9.4%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Dell Technologies better, we need to consider many other factors. Take risks for example - Dell Technologies has 4 warning signs we think you should be aware of.
But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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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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
