Yahoo Finance Institutional owners may consider drastic measures as FB Financial Corporation's (NYSE:FBK) recent US$59m drop adds to long-term losses
Key Insights
Given the large stake in the stock by institutions, FB Financial's stock price might be vulnerable to their trading decisions
52% of the business is held by the top 4 shareholders
Every investor in FB Financial Corporation (NYSE:FBK) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 65% to be precise, is institutions. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
And institutional investors saw their holdings value drop by 4.4% last week. This set of investors may especially be concerned about the current loss, which adds to a one-year loss of 33% for shareholders. Institutions or "liquidity providers" control large sums of money and therefore, these types of investors usually have a lot of influence over stock price movements. As a result, if the decline continues, institutional investors may be pressured to sell FB Financial which might hurt individual investors.
In the chart below, we zoom in on the different ownership groups of FB Financial.
View our latest analysis for FB Financial
What Does The Institutional Ownership Tell Us About FB Financial?
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.
FB Financial already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 FB Financial, (below). Of course, keep in mind that there are other factors to consider, too.
Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. FB Financial is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is James Ayers with 23% of shares outstanding. In comparison, the second and third largest shareholders hold about 13% and 11% of the stock. Additionally, the company's CEO Christopher Holmes directly holds 0.8% of the total shares outstanding.
On looking further, we found that 52% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.
Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of FB Financial
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.
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.
Our most recent data indicates that insiders own a reasonable proportion of FB Financial Corporation. Insiders own US$325m worth of shares in the US$1.3b company. That's quite meaningful. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.
General Public Ownership
The general public-- including retail investors -- own 10% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand FB Financial better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for FB Financial you should be aware of, and 1 of them is a bit unpleasant.
If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.
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.
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