Yahoo Finance GSI Technology, Inc. (NASDAQ:GSIT) surges 39%; individual investors who own 40% shares profited along with insiders
Key Insights
The considerable ownership by individual investors in GSI Technology indicates that they collectively have a greater say in management and business strategy
52% of the business is held by the top 10 shareholders
If you want to know who really controls GSI Technology, Inc. (NASDAQ:GSIT), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are individual investors with 40% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
While individual investors were the group that benefitted the most from last week’s US$50m market cap gain, insiders too had a 31% share in those profits.
In the chart below, we zoom in on the different ownership groups of GSI Technology.
Check out our latest analysis for GSI Technology
What Does The Institutional Ownership Tell Us About GSI Technology?
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 GSI Technology. 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 GSI Technology'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 GSI Technology. With a 10% stake, CEO Lee-Lean Shu is the largest shareholder. Aigh Capital Management, LLC is the second largest shareholder owning 8.1% of common stock, and Roumell Asset Management, LLC holds about 6.9% of the company stock.
On further inspection, we found that more than half the company's shares are owned by the top 10 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.
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 GSI Technology
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.
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.
Our information suggests that insiders maintain a significant holding in GSI Technology, Inc.. Insiders own US$55m worth of shares in the US$178m company. 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 40% ownership, the general public, mostly comprising of individual investors, have some degree of sway over GSI Technology. 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
Private equity firms hold a 8.1% stake in GSI Technology. This suggests they can be influential in key policy decisions. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand GSI Technology better, we need to consider many other factors. For example, we've discovered 2 warning signs for GSI Technology that you should be aware of before investing here.
If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
