Yahoo Finance Institutional investors control 65% of Confluent, Inc. (NASDAQ:CFLT) and were rewarded last week after stock increased 5.5%
Key Insights
Institutions' substantial holdings in Confluent implies that they have significant influence over the company's share price
The top 11 shareholders own 50% of the company
If you want to know who really controls Confluent, Inc. (NASDAQ:CFLT), then you'll have to look at the makeup of its share registry. We can see that institutions own the lion's share in the company with 65% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
And last week, institutional investors ended up benefitting the most after the company hit US$9.4b in market cap. The gains from last week would have further boosted the one-year return to shareholders which currently stand at 34%.
Let's take a closer look to see what the different types of shareholders can tell us about Confluent.
See our latest analysis for Confluent
What Does The Institutional Ownership Tell Us About Confluent?
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 Confluent. 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 Confluent, (below). Of course, keep in mind that there are other factors to consider, too.
Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. We note that hedge funds don't have a meaningful investment in Confluent. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Confluent's case, its Top Key Executive, Jun Rao, is the largest shareholder, holding 7.6% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 6.1% and 6.0%, of the shares outstanding, respectively. Interestingly, the second-largest shareholder, Edward Kreps is also Chief Executive Officer, again, pointing towards strong insider ownership amongst the company's top shareholders.
After doing some more digging, we found that the top 11 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.
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 Confluent
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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
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 most recent data indicates that insiders own a reasonable proportion of Confluent, Inc.. It has a market capitalization of just US$9.4b, and insiders have US$1.7b worth of shares in their own names. That's quite significant. 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
The general public, who are usually individual investors, hold a 11% stake in Confluent. 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 Company Ownership
We can see that Private Companies own 5.8%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Confluent better, we need to consider many other factors. To that end, you should be aware of the 4 warning signs we've spotted with Confluent .
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.
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.
