Is Investors Title Company (NASDAQ: ITIC) shareholding biased towards insiders?
Every investor in Investors Title Company (NASDAQ: ITIC) needs to know the most powerful shareholder groups. Generally speaking, as a business grows, institutions will increase their participation. Conversely, insiders often decrease their ownership over time. Warren Buffett said he enjoys “a business with sustainable competitive advantages that is run by skilled, owner-oriented people.” So it’s nice to see some insider ownership as it can suggest that the management is owner focused.
With a market cap of $ 311 million, Investors Title is a small cap stock, so it may not be well known to many institutional investors. In the graphic below, we can see that the institutions are visible on the share register. Let’s take a closer look at each type of owner to learn more about Investors Title.
NasdaqGS: Distribution of ITIC property April 22, 2021
What does institutional ownership tell us about investor security?
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more excited about a stock once it’s included in a major index. You would expect most businesses to have institutions listed, especially if they are growing.
As you can see, institutional investors hold a considerable stake in Investors Title. This implies that the analysts working for these institutions have looked at the stock and they like it. But like anyone else, they could be wrong. If several institutions change their mind about a stock at the same time, you could see the stock price drop quickly. So it’s worth checking out Investors Title’s earnings history below. Of course, it’s the future that really matters.
NasdaqGS: Profits and Revenue Growth ITIC April 22, 2021
Investors Title does not belong to hedge funds. The company’s main shareholder is Markel-Gayner Asset Management Corporation, with an 11% stake. Meanwhile, the second and third largest shareholders hold 10% and 5.8% of the outstanding shares, respectively. James Fine, who is the second largest shareholder, also holds the title of CEO.
We dug a little deeper and found that 8 of the major shareholders make up about 50% of the register, which implies that with the larger shareholders there are a few smaller shareholders, thus balancing each other’s interests somewhat.
Institutional ownership research is a good way to assess and filter the expected performance of a stock. The same can be achieved by studying the feelings of analysts. Our information suggests there is no analyst coverage of the stock, so it is likely little known.
Insider ownership of Title investors
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management ultimately responds to the advice. However, it is not uncommon for managers to be members of the board, especially if they are founder or CEO.
Insider ownership is positive when it indicates that executives think like the real owners of the company. However, strong insider ownership can also give immense power to a small group within the company. This can be negative in certain circumstances.
Our most recent data indicates that insiders own a reasonable proportion of Investors Title Company. It has a market capitalization of just $ 311 million and insiders hold $ 70 million in shares in their own name. I would say this shows alignment with shareholders, but it should be noted that the company is still quite small; some insiders may have founded the company. You can click here to see if these insiders have bought or sold.
General public property
The general public, with 27% of the company’s capital, will not be easily ignored. While this size of ownership may not be enough to influence a policy decision in their favor, they can still have a collective impact on company policies.
Private company ownership
It can be seen that private companies hold 5.0% of the shares issued. Private companies can be related parties. Sometimes insiders have an interest in a public company through a stake in a private company, rather than in their own capacity as an individual. Although it is difficult to draw general conclusions, it should be noted as an additional area of research.
It is always worth thinking about the different groups that own shares in a company. But to understand Investors Title better, there are many other factors to consider. Take, for example, the ubiquitous spectrum of investment risk. We have identified 1 warning sign with Investors Title, and understanding them should be part of your investment process.
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NB: The figures in this article are calculated from data for the last twelve months, which refer to the 12-month period ending on the last date of the month in which the balance sheet is dated. This may not be consistent with figures in annual reports.
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