What kind of investors own most of Ooma, Inc. (NYSE: OOMA)?

The large shareholder groups of Ooma, Inc. (NYSE: OOMA) have power over the company. Institutions often own shares in larger companies, and we expect to see insiders owning a noticeable percentage of smaller ones. I like to see at least a little insider ownership. As Charlie Munger said “Show me the incentive and I’ll show you the result”.

With a market capitalization of US$305 million, Ooma is a small cap stock, so it may not be well known to many institutional investors. In the chart below, we can see that institutional investors have bought the company. Let’s dig deeper into each owner type to learn more about Ooma.

NYSE: OOMA Ownership Breakdown July 29, 2022

What does institutional ownership tell us about Ooma?

Institutional investors typically compare their own returns to the returns of a commonly tracked index. They therefore generally consider buying larger companies that are included in the relevant benchmark.

We can see that Ooma has institutional investors; and they own a good part of the shares of the company. This suggests some credibility with professional investors. But we cannot rely solely on this fact since institutions sometimes make bad investments, like everyone else. It is not uncommon to see a sharp decline in the stock price if two large institutional investors attempt to sell a stock at the same time. So it’s worth checking out Ooma’s past earnings trajectory (below). Of course, keep in mind that there are other factors to consider as well.

earnings-and-revenue-growth
NYSE: OOMA Earnings and Revenue Growth July 29, 2022

Investors should note that institutions actually own more than half of the company, so they can collectively wield significant power. It appears that hedge funds own 21% of Ooma’s shares. This is interesting because hedge funds can be very active and militant. Many are looking for medium-term catalysts that will drive the stock price higher. Our data shows that Trigran Investments, Inc. is the largest shareholder with 10% of shares outstanding. Meanwhile, the second and third largest shareholders hold 7.6% and 5.8% of the outstanding shares respectively. Additionally, the company’s CEO, Eric Stang, directly owns 4.0% of the total shares outstanding.

Upon closer inspection, we found that more than half of the company’s shares are held by the top 10 shareholders, suggesting that the interests of larger shareholders are to some extent balanced by those of smaller ones.

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. A number of analysts cover the stock, so you can look at growth forecasts quite easily.

Ooma Insider Ownership

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management is ultimately responsible to the board of directors. However, it is not uncommon for managers to be members of the management board, especially if they are founders or CEOs.

Insider ownership is positive when it signals that executives think like the true 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 stock in Ooma, Inc. As individuals, insiders collectively own US$23 million of the US$305 million company. Good to see insider investing, but might be worth checking out if these insiders bought.

General public property

The general public, who are usually individual investors, own a 10% stake in Ooma. This size of ownership, although considerable, may not be sufficient to change company policy if the decision is not in line with other large shareholders.

Next steps:

It is always useful to think about the different groups that own shares in a company. But to better understand Ooma, we need to consider many other factors. Take risks for example – Ooma has 1 warning sign we think you should know.

But finally it’s the future, not the past, which will determine the performance of the owners of this company. That’s why we think it’s advisable to take a look at this free report showing whether analysts are predicting a better future.

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 in which the financial statements are dated. This may not be consistent with the annual report figures for the full year.

Feedback on this article? Concerned about content? Get in touch with us directly. You can also email the editorial team (at) Simplywallst.com.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Comments are closed.