RADCOM Ltd. (NASDAQ:RDCM) is definitely on the radar of institutional investors who own 31% of the company #UKFinance
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Given the large stake in the stock by institutions, RADCOM’s stock price might be vulnerable to their trading decisions
The top 7 shareholders own 51% of the company
15% of RADCOM is held by insiders
To get a sense of who is truly in control of RADCOM Ltd. (NASDAQ:RDCM), it is important to understand the ownership structure of the business. We can see that institutions own the lion’s share in the company with 31% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
Given the vast amount of money and research capacities at their disposal, institutional ownership tends to carry a lot of weight, especially with individual investors. As a result, a sizeable amount of institutional money invested in a firm is generally viewed as a positive attribute.
Let’s delve deeper into each type of owner of RADCOM, beginning with the chart below.
See our latest analysis for RADCOM
NasdaqCM:RDCM Ownership Breakdown November 30th 2024
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.
RADCOM already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 RADCOM’s historic earnings and revenue below, but keep in mind there’s always more to the story.
NasdaqCM:RDCM Earnings and Revenue Growth November 30th 2024
It would appear that 21% of RADCOM shares are controlled by hedge funds. That’s interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. Lynrock Lake LP is currently the company’s largest shareholder with 14% of shares outstanding. The second and third largest shareholders are Michael Zisapel and Klil Zisapel, with an equal amount of shares to their name at 7.1%.
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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.
Our information suggests that insiders maintain a significant holding in RADCOM Ltd.. Insiders have a US$29m stake in this US$187m business. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.
The general public– including retail investors — own 25% stake in the company, and hence can’t easily be ignored. While this group can’t necessarily call the shots, it can certainly have a real influence on how the company is run.
It seems that Private Companies own 8.7%, of the RADCOM stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it’s hard to draw any broad stroke conclusions, it is worth noting as an area for further research.
I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Take risks for example – RADCOM has 1 warning sign we think you should be aware of.
Ultimately the future is most important. You can access this free report on analyst forecasts for the company.
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.
