Insider Ownership Analysis - Are the Interests of Management and the Common Shareholders
In this article about the insider ownership analysis, I reveal what I believe is the minimum and maximum
share ownership percentage, owned by corporate insiders. Although I have to admit, that determining an
appropriate percentage of stock ownership is not an exact science, I do believe a thorough evaluation of a
company's stock ownership is an important step in my stock investment analysis.
In the article: Insider Stock Ownership - Which Exclusive Type of Stock Owners Are Your Fellow Shareholders, I
distinguish three types of stock owners: off-the-radar investors, on-the-radar investors and corporate insiders.
As I already explained in this article, I do not consider the holdings of the off-the-radar investors (i.e. the
private investors) to be relevant, as their individual holdings in a specific stock are normally relatively
small. Therefore I only evaluate the company ownership of the other two stock owner groups: the corporate
insiders and the on-the-radar investors.
Company Ownership Evaluation of Corporate Insiders
The main reason why I believe it's important that corporate insiders have a certain minimum percentage of share
ownership is logically: only then their interests are aligned with the off-the-radar investors (i.e. the private
investors): we all benefit from a rising share price and we all feel the pain when the share price is declining.
With their own money on the line, I believe that the corporate insiders are more devoted to accomplish success.
However, I do not want the influence of the corporate insiders to be too big, as then they can do almost
everything they please. For instance, acting as the company's management they could ask their shareholders to vote
in favour of certain proposals, which vote they can influence as they control a very large part of the shares
outstanding. Therefore I have determined the maximum share ownership percentage of the corporate insiders at
As I believe it's acceptable that the percentage of stock ownership in companies with a big market cap is
smaller than in those with a smaller market cap, I have set the minimum share ownership by corporate insiders as
shown in the table below:
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How I Conduct My Stock's Due Diligence Investigation Process.If
you want to know what I learned while I was conducting my due diligence, I recommend you to read
all the chapters of the investigation process.
Are These the Best Stocks to Buy Today.In my stock watchlist you
find stocks who offer great potential, but at the time I analysed these stocks they didn't comply
with all my guidelines from my due diligence chapters.
Are These the Best Shares to Buy Now.As the year 2015 has just started, I
believe it's about time that I share my stock portfolio with you. Therefore, you will find my
updated stock portfolio on this page.
Jeroen Snoeks is the founder of UndervaluedEquity.com, a website for
investors passionate about investing in undervalued stocks. ThroughUndervaluedEquity.com, he shares his
experience and knowledge and will soon reveal his personal stock portfolio.