I am going to take a deep dive into JM Global Holding Company’s (NASDAQ:WYIG) most recent ownership structure, not a frequent subject of discussion among individual investors. Ownership structure of a company has been found to affect share performance over time. Different types of investors can have varying degrees of influence on a company’s management team. For example, an active institutional investor may be more likely to hold a company accountable for certain actions whereas a passive fund will move in and out of stocks without regards to corporate governance. The implications of these institutions’ actions can either benefit or hinder individual investors, so it is important to understand the ownership composition of your stock investment. Now I will analyze WYIG’s shareholder registry in more detail.
See our latest analysis for WYIG NasdaqCM:WYIG Ownership Summary Sep 30th 17
Due to the big order sizes of institutional investors, a company’s shares can experience large, one-sided momentum, driven by high volume of shares removed from, or injected into, the market. Generally, an institutional ownership of 1.79%, in the case of WYIG, should not concern investors in terms of high stock volatility. But another factor to consider is the presence of hedge funds, who are notorious for active investing. In WYIG’s case, they make up 23.34% of ownership, indicating potential sharp stock price movements during significant transactions. However, I would explore its ownership registry in more detail to check how other ownership types affect its investment case for the long-term investor.
I find insiders are another important group of stakeholders, who are directly involved in making key decisions related to the use of capital. In essence, insider ownership is more about the alignment of shareholders’ interests with the management. 178.05% ownership of WYIG insiders is large enough to make an impact on shareholder returns. In general, this level of insider ownership has negatively affected underperforming (consistently low PE ratio) companies and positively affected the companies that outperform (consistently high PE ratio). Another aspect of insider ownership is to learn about their recent transactions. While insider buying is possibly a sign of a positive outlook for the company, selling doesn’t necessarily indicate a negative outlook as they may be selling to meet personal financial needs.
While WYIG has a low level of institutional ownership, active hedge funds still hold a significant stake in the company. Their ownership is a non-fundamental factor, which can impact WYIG’s price volatility in the short-term, considering this group investors may come under pressure to deliver in the short term. It is important that WYIG offers enough margin of safety in order to avoid a significant portfolio impact resulting from a sustained sell-off and drop in share value. However, other important factors we must never forget to assess are the fundamentals. I recommend you take a look at our latest free analysis report on JM Global Holding to see WYIG’s fundamentals and whether it could be considered an undervalued opportunity.
PS. If you are not interested in JM Global Holding anymore, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
How is Warren Buffet’s advice working out for Bill Gates?
Bill Gates dropped out of college to found Microsoft. He’s a prodigy who has become one of the richest men in the world. But when it comes to the stock market, he follows the advice of billionaire investor Warren Buffett. So what stocks is he holding today? Click here to view a FREE detailed infographic analysis of Bill & Melinda Gates Foundation’s portfolio.