Key Insights
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Given the large stake in the stock by institutions, Cognyte Software’s stock price might be vulnerable to their trading decisions
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A total of 10 investors have a majority stake in the company with 51% ownership
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Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company
If you want to know who really controls Cognyte Software Ltd. (NASDAQ:CGNT), then you’ll have to look at the makeup of its share registry. With 52% stake, institutions possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
Because institutional owners have a huge pool of resources and liquidity, their investing decisions tend to carry a great deal of weight, especially with individual investors. Hence, having a considerable amount of institutional money invested in a company is often regarded as a desirable trait.
Let’s take a closer look to see what the different types of shareholders can tell us about Cognyte Software.
See our latest analysis for Cognyte Software
What Does The Institutional Ownership Tell Us About Cognyte Software?
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.
As you can see, institutional investors have a fair amount of stake in Cognyte Software. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. If multiple institutions change their view on a stock at the same time, you can see the share price drop fast. It’s therefore worth looking at Cognyte Software’s earnings history below. Of course, the future is what really matters.
Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. It looks like hedge funds owning 15% of Cognyte Software shares. That’s worth noting, since hedge funds are often quite active investors who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. Edenbrook Capital, Llc is currently the company’s largest shareholder with 9.8% of outstanding shares. Meanwhile, the second and third largest shareholders, hold 7.1% and 6.5%, of the outstanding shares, respectively.
On further inspection, we found that more than half of the company’s shares are owned by the top 10 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.
Researching institutional ownership is a good way to gauge and filter a stock’s expected performance. The same can be achieved by studying analyst sentiments. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of Cognyte Software
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management runs the business, but the CEO will answer to the board, even if he or she is a member of it.
Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.
We can see that insiders own shares in Cognyte Software Ltd.. In their own name, insiders own US$6.8m worth of stock in the US$287m company. It’s good to see some investment by insiders, but it might be worth checking if those insiders have been buying.
General Public Ownership
With a 30% ownership, the general public, mostly consisting of individual investors, have some degree of sway over Cognyte Software. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should learn about the 4 warning signs we’ve spotted with Cognyte Software (including 2 which are concerning) .
But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it is advisable to take a look at this free report showing whether analysts are predicting a brighter future.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
Have feedback on this article? Concerned about the content? get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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