Yahoo Finance Positive week for Fastly, Inc. (NYSE:FSLY) institutional investors who lost 65% over the past year
Key Insights
Institutions' substantial holdings in Fastly implies that they have significant influence over the company's share price
The top 10 shareholders own 52% of the company
To get a sense of who is truly in control of Fastly, Inc. (NYSE:FSLY), it is important to understand the ownership structure of the business. With 71% 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).
After a year of 65% losses, last week’s 23% gain would be welcomed by institutional investors as a possible sign that returns might start trending higher.
In the chart below, we zoom in on the different ownership groups of Fastly.
Check out our latest analysis for Fastly
What Does The Institutional Ownership Tell Us About Fastly?
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 Fastly. 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. 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 Fastly, (below). Of course, keep in mind that there are other factors to consider, too.
Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. We note that hedge funds don't have a meaningful investment in Fastly. Our data shows that The Vanguard Group, Inc. is the largest shareholder with 11% of shares outstanding. With 8.5% and 7.5% of the shares outstanding respectively, BlackRock, Inc. and Morgan Stanley Investment Management Inc. are the second and third largest shareholders. Additionally, the company's CEO Todd Nightingale directly holds 1.2% of the total shares outstanding.
We also observed that the top 10 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.
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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Fastly
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run 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 report that insiders do own shares in Fastly, Inc.. In their own names, insiders own US$69m worth of stock in the US$929m company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.
General Public Ownership
With a 22% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Fastly. 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. Be aware that Fastly is showing 3 warning signs in our investment analysis , 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.
