A look at the shareholders of NICE Ltd. (TLV: NICE) can tell us which group is more powerful. And the group that holds the biggest slice of the pie is made up of 82%-owned institutions. In other words, the group is likely to gain the most (or lose the most) from its investment in the business.
And institutional investors suffered the highest losses after the company’s share price fell 12% last week. This set of investors may be particularly concerned about the current loss, which comes on top of a 9.3% year-on-year loss for shareholders. Often referred to as “market makers,” institutions wield significant power in influencing the price dynamics of any stock. As a result, if the decline continues, institutional investors may be forced to sell NICE, which could hurt individual investors.
Let’s take a closer look at what different types of shareholders can tell us about NICE.
Check out our latest analysis for NICE
What does institutional ownership tell us about NICE?
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.
NICE already has establishments on the share register. Indeed, they hold a respectable stake in the company. This may indicate that the company has some degree of credibility in the investment community. However, it is best to be wary of relying on the so-called validation that accompanies institutional investors. They are also sometimes 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 NICE’s revenue and historical earnings below, but keep in mind there’s always more to tell.
Institutional investors own more than 50% of the company, so together they can probably heavily influence board decisions. NICE does not belong to hedge funds. Looking at our data, we can see that the largest shareholder is Capital Research and Management Company with 15% of the shares outstanding. With 8.8% and 5.8% of the shares outstanding, respectively, Artisan Partners Limited Partnership and BlackRock, Inc. are the second and third largest shareholders.
We also observed that the top 10 shareholders represent more than half of the share register, with some small shareholders to balance the interests of the larger ones to some extent.
Institutional ownership research is a good way to assess and filter the expected performance of a stock. The same can be obtained by studying the feelings of the analyst. There are a reasonable number of analysts covering the stock, so it might be useful to know their overall view on the future.
NICE Insider Property
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.
We note that our data does not show any board members personally owning shares. Since we do not track insider ownership, we may have missing data. It would therefore be interesting to evaluate CEO compensation and tenure here.
General public property
The general public, including retail investors, owns 18% of the company’s capital and therefore cannot be easily ignored. 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.
It is always useful to think about the different groups that own shares in a company. But to better understand NICE, we need to consider many other factors. For example, we found 1 warning sign for NICE which you should be aware of before investing here.
But finally it’s the future, not the past, which will determine the performance of the owners of this company. Therefore, we think it’s advisable to take a look at this free report showing whether analysts are predicting a brighter 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.