Major shareholder groups of Northern Star Investment Corp. IV (NYSE: NSTD) have power over society. Institutions often own shares in larger companies, and we expect to see insiders owning a noticeable percentage of smaller ones. Companies that have been privatized tend to have low insider ownership.
Northern Star Investment IV is not a big company by global standards. It has a market cap of US$493 million, which means it wouldn’t get the attention of many institutional investors. Looking at our ownership group data (below), it appears that institutions are visible on the share register. Let’s take a closer look at what different types of shareholders can tell us about Northern Star Investment IV.
What does institutional ownership tell us about Northern Star Investment IV?
Many institutions measure their performance against an index that approximates the local market. They therefore generally pay more attention to companies that are included in the main indices.
As you can see, institutional investors hold a sizeable share of Northern Star Investment IV. This implies that analysts working for these institutions have reviewed the stock and like it. But like everyone else, they can be wrong. When multiple institutions hold a stock, there is always a risk that they are in a “crowded trade”. When such a transaction goes wrong, multiple parties may compete to quickly sell shares. This risk is higher in a company with no history of growth. You can see Northern Star Investment IV’s historic earnings and revenue below, but keep in mind there’s always more to tell.
Investors should note that institutions actually own more than half of the company, so they can collectively wield significant power. Reportedly, 6.4% of Northern Star Investment IV shares are controlled by hedge funds. This is worth noting, as hedge funds are often quite active investors, who may try to influence management. Many want value creation (and a rise in share price) in the short to medium term. Looking at our data, we can see that the major shareholder is Northern Star IV Sponsor LLC with 19% of the shares outstanding. For context, the second shareholder owns approximately 6.4% of the outstanding shares, followed by a 4.7% ownership by the third shareholder.
We also observed that the top 9 shareholders represent more than half of the share register, with some small shareholders to balance the interests of the larger ones to some extent.
While studying the institutional ownership of a company can add value to your research, it is also recommended that you research analyst recommendations to better understand a stock’s expected performance. Our information suggests there is no analyst coverage of the stock, so it is likely little known.
Insider ownership of Northern Star Investment IV
The definition of an insider may differ slightly from country to country, but board members still matter. The management of the company answers to the board of directors and the latter must represent the interests of the shareholders. In particular, sometimes the senior executives themselves sit on the board of directors.
I generally consider insider ownership to be a good thing. However, there are times when it is more difficult for other shareholders to hold the board accountable for decisions.
Our most recent data indicates that insiders own less than 1% of Northern Star Investment Corp. IV. But they may have an indirect interest through a corporate structure that we have not noted. It appears that board members hold no more than $2.9 million in stock in the $493 million company. Many tend to prefer to see a board with larger holdings. A good next step might be to take a look at this free summary of insider buying and selling.
General public property
The general public, including retail investors, owns 15% of the company’s capital and therefore cannot be easily ignored. Although this group may not necessarily make the decisions, they can certainly have a real influence on the way the business is run.
Private Company Ownership
We can see that private companies hold 19% of the issued shares. It might be worth exploring this further. If related parties, such as insiders, have an interest in any of these private companies, this must be disclosed in the annual report. Private companies may also have a strategic interest in the company.
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 3 warning signs we spotted some with Northern Star Investment IV (including 2 that are potentially serious).
If you’d rather check out another company – one with potentially superior finances – then don’t miss this free list of interesting companies, supported by solid financial data.
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 the financial statements are dated. This may not be consistent with the annual report figures for the full year.
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