Is the shareholding of Zscaler, Inc. (NASDAQ: ZS) biased in favor of insiders?
Every investor in Zscaler, Inc. (NASDAQ: ZS) should know about the most powerful shareholder groups. Generally speaking, as a business grows, institutions increase their participation. Conversely, insiders often decrease their ownership over time. I generally like to see some degree of insider ownership, even if it’s just a little. As Nassim Nicholas Taleb said, “Don’t tell me what you think, tell me what you have in your wallet.
With a market cap of US $ 43 billion, Zscaler 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. Our analysis of company ownership, below, shows that institutions are visible on the share register. Let’s take a closer look at what different types of shareholders can tell us about Zscaler.
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What does institutional ownership tell us about Zscaler?
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.
As you can see, institutional investors have a significant stake in Zscaler. This suggests some credibility among professional investors. But we cannot rely on this fact alone because institutions sometimes make bad investments, like everyone else. It is not uncommon to see a sharp drop in the stock price if two large institutional investors attempt to sell a stock at the same time. So it’s worth checking out Zscaler’s past earnings trajectory (below). Of course, keep in mind that there are other factors to consider as well.
We note that the hedge funds do not have a significant investment in Zscaler. With a 19% stake, CEO Jagtar Chaudhry is the main shareholder. Ajay Mangal is the second largest shareholder with 19% of the common stock, and BlackRock, Inc. owns approximately 5.4% of the company’s stock.
Our research also highlighted the fact that around 51% of the company is controlled by the top 5 shareholders, suggesting that these owners have significant influence over the company.
While it makes sense to study a company’s institutional ownership data, it also makes sense to study analysts’ sentiments to know which way the wind is blowing. There are a reasonable number of analysts covering the stock, so it can be helpful to know their overall vision for the future.
Zscaler Insider Property
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The management of the company is accountable to the board of directors and the board must represent the interests of the shareholders. Notably, sometimes senior executives themselves sit on the board of directors.
Insider ownership is positive when it indicates that executives think like the real owners of the company. However, strong insider ownership can also give immense power to a small group within the company. This can be negative in certain circumstances.
Our most recent data indicates that insiders own a reasonable proportion of Zscaler, Inc. Insiders own $ 17 billion in company shares worth $ 43 billion. It is quite significant. It’s good to see this level of investment. You can check here if these insiders have bought recently.
General public property
The general public, with a 16% stake in the company, will not be easily ignored. While this group cannot necessarily take the lead, it can certainly have a real influence on how the business is run.
While it is worth considering the different groups that own a business, there are other factors that are even more important. For example, we discovered 4 warning signs for Zscaler which you should know before investing here.
If you are like me, you might want to ask yourself if this business will grow or shrink. Fortunately, you can check out this free report showing analysts’ forecasts for its future.
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 day 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.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.
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