Every investor in Science Applications International Corporation (NYSE: SAIC) should know the most powerful shareholder groups. Generally speaking, as a company grows, institutions increase their ownership. Conversely, insiders often decrease their ownership over time. Companies that were previously publicly owned tend to have less insider ownership.
Science Applications International is a pretty big company. It has a market cap of US$4.9 billion. Normally, institutions own a significant share of a business of this size. Looking at our ownership group data (below), it appears that institutions own shares in the company. Let’s take a closer look at what different types of shareholders can tell us about Science Applications International.
What does institutional ownership tell us about Science Applications International?
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.
Science Applications International already has institutions on the share register. Indeed, they hold a respectable stake in the company. This may indicate that the company has some degree of credibility in the investment community. However, it is best to be wary of relying on the so-called validation that accompanies institutional investors. They are also sometimes wrong. If multiple institutions change their minds on a stock at the same time, you could see the stock price drop quickly. So it’s worth checking out Science Applications International’s revenue history below. Of course, the future is what really matters.
Institutional investors own more than 50% of the company, so together they can probably heavily influence board decisions. We note that hedge funds have no significant investment in Science Applications International. Wellington Management Group LLP is currently the largest shareholder, with 11% of the outstanding shares. For context, the second shareholder owns approximately 9.2% of the outstanding shares, followed by an 8.5% ownership by the third shareholder.
A closer look at our ownership figures suggests that the top 11 shareholders hold a combined ownership of 51%, implying that no single shareholder has a majority.
Institutional ownership research is a good way to assess and filter the expected performance of a stock. The same can be obtained by studying the feelings of the analyst. A number of analysts cover the stock, so you can look at growth forecasts quite easily.
Insider property of Science Applications International
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The management of the company runs the company, but the CEO will answer to the board of directors, even if he is a member of it.
Most view insider ownership as a positive because it can indicate that the board is well aligned with other shareholders. However, there are times when too much power is concentrated within this group.
Our data suggests that insiders hold less than 1% of Science Applications International Corporation in their own name. This is a fairly large company, so it would be possible for board members to hold a significant stake in the company, without holding much proportional interest. In this case, they own about $34 million worth of stock (at today’s prices). Good to see board members holding stock, but might be worth checking out if these insiders bought.
General public property
The general public, including retail investors, owns 18% of the company’s capital and therefore cannot be easily ignored. While this size of ownership may not be enough to sway a policy decision in their favor, they can still have a collective impact on company policies.
While it is worth considering the different groups that own a business, there are other, even more important factors. To do this, you need to find out about the 2 warning signs we spotted with Science Applications International (including 1 which is a bit unpleasant) .
If you’re like me, you might want to ask yourself if this business will grow or shrink. Fortunately, you can check this free report showing analysts’ predictions for its future.
NB: The figures in this article are calculated using trailing twelve month data, which refers to the 12 month period ending on the last day of the month in which the financial statements are dated. This may not be consistent with the annual report figures for the full year.
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