Megachips corporation is currently the largest shareholder with 25% of the shares outstanding.
Institutional investors are SiTime Corporation's (NASDAQ:SITM) biggest bettors and were rewarded after last week's US$308m market cap gain
By
Simply Wall StPublishedFebruary 11, 2022
Source: Shutterstock
To get a sense of who is truly in control of SiTime Corporation (
NASDAQ:SITM), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 62% to be precise, is institutions. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
And things are looking up for institutional investors after the company gained US$308m in market cap last week. One-year return to shareholders is currently 51% and last week’s gain was the icing on the cake.
Let's take a closer look to see what the different types of shareholders can tell us about SiTime.
See our latest analysis for SiTime
NasdaqGM:SITM Ownership Breakdown February 11th 2022
What Does The Institutional Ownership Tell Us About SiTime?
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.
We can see that SiTime does have institutional investors; and they hold a good portion of the company's stock. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see SiTime's historic earnings and revenue below, but keep in mind there's always more to the story.
NasdaqGM:SITM Earnings and Revenue Growth February 11th 2022
Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Hedge funds don't have many shares in SiTime. MegaChips Corporation is currently the largest shareholder, with 25% of shares outstanding. The second and third largest shareholders are FMR LLC and Franklin Resources, Inc., with an equal amount of shares to their name at 6.8%.
On further inspection, we found that more than half the company's shares are owned by the top 7 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.
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 SiTime
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.
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.
Shareholders would probably be interested to learn that insiders own shares in SiTime Corporation. The insiders have a meaningful stake worth US$73m. Most would see this as a real positive. If you would like to explore the question of insider alignment, you can
click here to see if insiders have been buying or selling.
General Public Ownership
The general public-- including retail investors -- own 12% stake in the company, and hence can't easily be ignored. 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.
Public Company Ownership
Public companies currently own 25% of SiTime stock. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.
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