Yahoo Finance With 51% ownership, Nelnet, Inc. (NYSE:NNI) insiders have a lot riding on the company's future
Key Insights
Insiders appear to have a vested interest in Nelnet's growth, as seen by their sizeable ownership
The top 5 shareholders own 52% of the company
Every investor in Nelnet, Inc. (NYSE:NNI) should be aware of the most powerful shareholder groups. With 51% stake, individual insiders possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
So, insiders of Nelnet have a lot at stake and every decision they make on the company’s future is important to them from a financial point of view.
Let's delve deeper into each type of owner of Nelnet, beginning with the chart below.
See our latest analysis for Nelnet
What Does The Institutional Ownership Tell Us About Nelnet?
Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.
Nelnet 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Nelnet, (below). Of course, keep in mind that there are other factors to consider, too.
Our data indicates that hedge funds own 5.2% of Nelnet. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Nelnet's case, its Top Key Executive, Michael Dunlap, is the largest shareholder, holding 24% of shares outstanding. In comparison, the second and third largest shareholders hold about 12% and 5.6% of the stock. In addition, we found that Jeffrey Noordhoek, the CEO has 1.5% of the shares allocated to their name.
Our research also brought to light the fact that roughly 52% of the company is controlled by the top 5 shareholders suggesting that these owners wield significant influence on the business.
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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.
Insider Ownership Of Nelnet
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.
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.
Our most recent data indicates that insiders own the majority of Nelnet, Inc.. This means they can collectively make decisions for the company. Insiders own US$1.8b worth of shares in the US$3.5b company. That's extraordinary! Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if they have been selling down their stake.
General Public Ownership
The general public, who are usually individual investors, hold a 13% stake in Nelnet. 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.
Private Company Ownership
Our data indicates that Private Companies hold 5.8%, of the company's shares. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Nelnet is showing 3 warning signs in our investment analysis , and 1 of those makes us a bit uncomfortable...
Ultimately the future is most important. You can access this free report on analyst forecasts for the company.
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.
