Every investor in Cadence Design Systems, Inc. (NASDAQ: CDNS) needs to know the most powerful shareholder groups. Institutions often own shares in more established companies, while it is not uncommon to see insiders owning a good number of smaller companies. Companies that were previously state-owned tend to have fewer insiders.
With a market capitalization of US $ 39 billion, Cadence Design Systems is pretty big. We would expect to see institutional investors on the register. Companies of this size are also generally well known to retail investors. In the graphic 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 Cadence Design Systems.
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What does institutional ownership tell us about Cadence Design Systems?
Many institutions measure their performance against an index that approximates the local market. Thus, they generally pay more attention to companies that are included in the major indices.
Cadence Design Systems already has institutions on the share register. Indeed, they hold a respectable stake in the company. This may indicate that the company has a certain degree of credibility in the investment community. However, it is better to be careful not to rely on the so-called validation that accompanies institutional investors. They too are sometimes wrong. When several institutions hold a stock, there is always a risk that they are in a “crowded trade”. When such a transaction goes awry, several parties may compete with each other to sell stocks quickly. This risk is higher in a company without a history of growth. You can see Cadence Design Systems’ historical revenue and revenue below, but keep in mind that there is always more to tell.
Investors should note that institutions actually own more than half of the business, so they can collectively wield significant power. We note that hedge funds do not have a significant investment in Cadence Design Systems. Looking at our data, we can see that the largest shareholder is BlackRock, Inc. with 12% of the shares outstanding. With 11% and 8.1% of shares outstanding, respectively, The Vanguard Group, Inc. and MFS Investment Management, Inc. are the second and third largest shareholders. In addition, the CEO of the company, Lip-Bu Tan, directly owns 0.8% of the total shares outstanding.
A closer look at our ownership figures suggests that the top 13 shareholders have a combined 50% ownership, implying that no shareholder has a majority.
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 the expected performance of a stock. There are a reasonable number of analysts covering the stock, so it can be helpful to know their overall vision for the future.
Insider property of Cadence Design Systems
The definition of business insiders can be subjective and vary from jurisdiction to jurisdiction. Our data reflects individual insiders, capturing at least board members. The management of the company manages the company, but the CEO will report to the board of directors, even if he is a member of the board.
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.
Shareholders would likely be interested to learn that insiders own stock in Cadence Design Systems, Inc. Insiders own $ 544 million in stock (at current prices). It’s good to see this level of investment. You can check here if these insiders have bought recently.
General public property
With 11% ownership, the general public has some influence over Cadence Design Systems. While this property size may not be enough to influence a policy decision in their favor, they can still have a collective impact on company policies.
Next steps:
It’s always worth thinking about the different groups that own shares in a company. But to better understand Cadence Design Systems, there are many other factors that we need to consider. To do this, you need to know the 1 warning sign we spotted with Cadence Design Systems.
If you’d rather find out what analysts are predicting in terms of future growth, don’t miss this free analyst forecast report.
NB: The figures in this article are calculated from data for the last twelve months, which refer to the 12-month period ending on the last date of the month of date of the financial statement. This may not be consistent with the figures in the annual report for the entire year.
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