Yahoo Finance Open Text Corporation (NASDAQ:OTEX) is favoured by institutional owners who hold 75% of the company
Key Insights
Significantly high institutional ownership implies Open Text's stock price is sensitive to their trading actions
51% of the business is held by the top 24 shareholders
A look at the shareholders of Open Text Corporation (NASDAQ:OTEX) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are institutions with 75% ownership. 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. As a result, a sizeable amount of institutional money invested in a firm is generally viewed as a positive attribute.
In the chart below, we zoom in on the different ownership groups of Open Text.
See our latest analysis for Open Text
What Does The Institutional Ownership Tell Us About Open Text?
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.
Open Text already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Open Text's earnings history below. Of course, the future is what really matters.
Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Open Text is not owned by hedge funds. Jarislowsky, Fraser Limited is currently the largest shareholder, with 6.2% of shares outstanding. With 5.7% and 4.6% of the shares outstanding respectively, Harris Associates L.P. and FMR LLC are the second and third largest shareholders.
Looking at the shareholder registry, we can see that 51% of the ownership is controlled by the top 24 shareholders, meaning that no single shareholder has a majority interest in the ownership.
While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
Insider Ownership Of Open Text
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.
Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.
We can report that insiders do own shares in Open Text Corporation. It is a very large company, and board members collectively own US$218m worth of shares (at current prices). we sometimes take an interest in whether they have been buying or selling.
General Public Ownership
With a 23% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Open Text. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Open Text better, we need to consider many other factors. Take risks for example - Open Text has 3 warning signs (and 1 which doesn't sit too well with us) we think you should know about.
If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.
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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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