In the wake of InMode Ltd.’s (NASDAQ:INMD) latest US$103m market cap drop, institutional owners may be forced to take severe actions
- Significantly high institutional ownership implies that InMode’s stock price is sensitive to its trading activity
- The 25 largest shareholders own 43% of the company
- 14% of InMode is owned by insiders
If you want to know who InMode Ltd. (NASDAQ:INMD) really controls, you need to look at the composition of the stock register. With a 58% share, institutions own the maximum shares in the company. That is, the group will benefit most when the stock goes up (or lose most when it goes down).
And institutional investors suffered the heaviest losses after the company’s share price fell 4.0% last week. This group of investors may be particularly concerned about the current loss, which adds to a 27% one-year loss for shareholders. Institutions, also known as “smart money,” have a huge impact on how a stock’s price moves. Consequently, if the downtrend continues, institutions could come under pressure to sell InMode, which could have a negative impact on individual investors.
Let’s take a closer look at what the different types of shareholders can tell us about InMode.
Check out our latest analysis for InMode
What does institutional ownership tell us about InMode?
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they’re often more excited about a stock once it’s included in a major index. We would expect most companies to have some institutions on the register, especially as they grow.
InMode already has institutions in the share register. In fact, they own a respectable stake in the company. This suggests some credibility among professional investors. But we can’t rely on that alone, as institutions sometimes make bad investments, just like everyone else. If several institutes change their opinion on a stock at the same time, the share price could fall quickly. It is therefore worth checking out InMode’s earnings history below. Of course, what really matters is the future.
Investors should note that institutions actually own more than half of the company, so collectively they can wield significant power. Hedge funds don’t have a lot of stakes in InMode. Our data shows that Robert Mulholland is the largest shareholder with 5.8% of shares outstanding. The second and third largest shareholders are Acadian Asset Management LLC and Michael Kreindel, who hold an equal stake of 4.2%. Michael Kreindel, the third largest shareholder, also holds the title of board member. In addition, CEO Moshe Mizrahy owns 3.5% of the company’s shares.
Our studies suggest that the top 25 shareholders collectively control less than half of the company’s stock, meaning the company’s stock is widely dispersed and there is no dominant shareholder.
While examining a company’s institutional ownership can add value to your research, it’s also a good practice to research analyst recommendations to gain a deeper understanding of a stock’s expected performance. Quite a few analysts cover the stock, so you can easily look at the projected growth.
Insider ownership of InMode
While the precise definition of an insider can be subjective, almost everyone considers a board member to be an insider. The management of the company is accountable to the board of directors, which should represent the interests of the shareholders. It is noteworthy that sometimes high-ranking managers themselves sit on the board.
Insider ownership is positive when it signals leadership thinks like the true owners of the company. However, a high proportion of insiders can give immense power to even a small group within the organization. This can sometimes be negative.
It appears that insiders own a significant stake in InMode Ltd. own. It’s very interesting to see that insiders have a significant $338 million stake in this $2.5 billion deal. Most would be happy to see the board investing alongside them. You might want to access this free chart showing recent insider trading.
General Public Property
The general public, which are typically individual investors, own a 28% stake in InMode. While this ownership size is substantial, it may not be enough to change company policy if the decision is not aligned with other major shareholders.
While it’s worth considering the different groups that own a business, there are other factors that are even more important.
I like to dive deeper how a company has developed in the past. In it you will find historical earnings and earnings detailed graphics.
But ultimately it is the future, not the past that determines how well the owners of this business will do. Therefore, we think it’s wise to take a look at this free report that shows whether analysts are predicting a brighter future.
Note: The figures in this article are calculated using data for the last twelve months, relating to the 12-month period ending on the last date of the month to which the financial statements are dated. This may not match the figures in the full year report.
The assessment is complex, but we help to simplify it.
Find out if InMode might be over or under rated by checking out our comprehensive analysis which includes the following Fair Value Estimates, Risks and Warnings, Dividends, Insider Trading and Financial Health.
Check out the free analysis
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This Simply Wall St article is of a general nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock and does not take into account your goals or financial situation. Our goal is to offer you long-term focused analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.