Each investor in Southern States Bancshares, Inc. (NASDAQ: SSBK) should know the most powerful shareholder groups. Big companies usually have institutions as shareholders, and we usually see insiders owning shares in small companies. I like to see at least a little insider ownership. As Charlie Munger said “Show me the incentive and I’ll show you the result”.
Southern States Bancshares is a small company with a market capitalization of US$189 million, so it may still fly under the radar of many institutional investors. In the graph below, we can see that the institutions are visible on the share register. Let’s take a closer look at what different types of shareholders can tell us about Southern States Bancshares.
See our latest analysis for Southern States Bancshares
What does institutional ownership tell us about the bank stocks of Southern states?
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.
Southern States Bancshares already has institutions on the stock register. Indeed, they hold a respectable stake in the company. This implies that analysts working for these institutions have reviewed the stock and like it. But like everyone else, they can be 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 Southern States Bancshares historical revenue and earnings below, but keep in mind there’s always more to tell.
Our data shows that hedge funds own 19% of Southern state bank stocks. This is worth noting, as hedge funds are often quite active investors, who may try to influence management. Many want value creation (and a rise in share price) in the short to medium term. Strategic Value Bank Partners LLC is currently the largest shareholder, with 9.7% of the shares outstanding. In comparison, the second and third shareholders hold approximately 9.1% and 7.7% of the shares. Additionally, the company’s CEO, Stephen Whatley, directly owns 7.1% of the total shares outstanding.
We also observed that the top 8 shareholders represent more than half of the share register, with some small shareholders to balance the interests of the larger ones to some extent.
While studying the institutional ownership of a company can add value to your research, it is also recommended that you research analyst recommendations to better understand a stock’s expected performance. Although there is some analyst coverage, the company is probably not widely covered. So it could attract more attention, on the track.
Insider Ownership of Southern States Bank Stocks
The definition of company insiders can be subjective and varies from jurisdiction to jurisdiction. Our data reflects individual insiders, capturing at least board members. 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.
It appears that insiders own a large share of Southern States Bancshares, Inc. Insiders own a $41 million stake in this $189 million company. We would say this shows alignment with shareholders, but it should be noted that the company is still quite small; some insiders may have founded the company. You can click here to see if these insiders have been buying or selling.
General public property
The general public, who are usually individual investors, hold a 31% stake in Southern States Bancshares. 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.
Private equity ownership
The private equity firms hold a 5.1% stake in Southern States Bancshares. This suggests that they can influence key policy decisions. This might appeal to some, because private equity is sometimes an activist who holds management accountable. But other times, the private equity sells off, after taking the company public.
I find it very interesting to see who exactly owns a business. But to really get insight, we also need to consider other information. Take for example the ubiquitous specter of investment risk. We have identified 1 warning sign with Southern States Bancshares and understanding them should be part of your investment process.
But finally it’s the future, not the past, which will determine the performance of the owners of this company. That’s why we think it’s advisable to take a look at this free report showing whether analysts are predicting a better 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.
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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.