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The L.S. Starrett Company (NYSE:SCX) surges 11%; individual investors who own 44% shares profited along with institutions

Key Insights

  • L.S. Starrett's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public

  • 51% of the business is held by the top 17 shareholders

  • 42% of L.S. Starrett is held by Institutions

If you want to know who really controls The L.S. Starrett Company (NYSE:SCX), 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 44% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Individual investors gained the most after market cap touched US$101m last week, while institutions who own 42% also benefitted.

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Let's take a closer look to see what the different types of shareholders can tell us about L.S. Starrett.

View our latest analysis for L.S. Starrett

ownership-breakdown
ownership-breakdown

What Does The Institutional Ownership Tell Us About L.S. Starrett?

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.

We can see that L.S. Starrett does have institutional investors; and they hold a good portion of the company's stock. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at L.S. Starrett's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
earnings-and-revenue-growth

Hedge funds don't have many shares in L.S. Starrett. The company's largest shareholder is GAMCO Investors, Inc., with ownership of 11%. In comparison, the second and third largest shareholders hold about 5.4% and 4.9% of the stock. Furthermore, CEO Douglas Starrett is the owner of 2.2% of the company's shares.

A closer look at our ownership figures suggests that the top 17 shareholders have a combined ownership of 51% implying that no single shareholder has a majority.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of L.S. Starrett

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 some shares in The L.S. Starrett Company. It has a market capitalization of just US$101m, and insiders have US$6.6m worth of shares, in their own names. It is good to see some investment by insiders, but we usually like to see higher insider holdings. It might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 44% stake in L.S. Starrett. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Public Company Ownership

It appears to us that public companies own 3.7% of L.S. Starrett. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too.

I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow, for free.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.