Key Insights

• Given the large stake in the stock by institutions, Credo Technology Group Holding's stock price might be vulnerable to their trading decisions
• The top 12 shareholders own 51% of the company
• Recent sales by insiders

Every investor in Credo Technology Group Holding Ltd (NASDAQ:CRDO) should be aware of the most powerful shareholder groups. We can see that institutions own the lion's share in the company with 60% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And things are looking up for institutional investors after the company gained US$300m in market cap last week. One-year return to shareholders is currently 39% and last week's gain was the icing on the cake.

In the chart below, we zoom in on the different ownership groups of Credo Technology Group Holding.

View our latest analysis for Credo Technology Group Holding

What Does The Institutional Ownership Tell Us About Credo Technology Group Holding?

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 Credo Technology Group Holding does have institutional investors; and they hold a good portion of the company's stock. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Credo Technology Group Holding's earnings history below. Of course, the future is what really matters.

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. We note that hedge funds don't have a meaningful investment in Credo Technology Group Holding. Looking at our data, we can see that the largest shareholder is The Vanguard Group, Inc. with 7.9% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 7.1% and 6.8%, of the shares outstanding, respectively. Chi Fung Cheng, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors. In addition, we found that William Brennan, the CEO has 2.1% of the shares allocated to their name.

After doing some more digging, we found that the top 12 have the combined ownership of 51% in the company, suggesting that no single shareholder has significant control over the company.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Credo Technology Group Holding

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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

It seems insiders own a significant proportion of Credo Technology Group Holding Ltd. It has a market capitalization of just US$3.1b, and insiders have US$557m worth of shares in their own names. That's quite significant. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

The general public, who are usually individual investors, hold a 22% stake in Credo Technology Group Holding. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Credo Technology Group Holding better, we need to consider many other factors. For instance, we've identified 2 warning signs for Credo Technology Group Holding that you should be aware of.

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.