Institutional investors are Sterling Infrastructure, Inc.'s (NASDAQ:STRL) biggest bettors and were rewarded after last week's US$614m market cap gain

Key Insights

• Given the large stake in the stock by institutions, Sterling Infrastructure's stock price might be vulnerable to their trading decisions
• The top 19 shareholders own 51% of the company
• Insiders have bought recently

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To get a sense of who is truly in control of Sterling Infrastructure, Inc. (NASDAQ:STRL), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are institutions with 85% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And last week, institutional investors ended up benefitting the most after the company hit US$4.6b in market cap. The gains from last week would have further boosted the one-year return to shareholders which currently stand at 43%.

In the chart below, we zoom in on the different ownership groups of Sterling Infrastructure.

Check out our latest analysis for Sterling Infrastructure

What Does The Institutional Ownership Tell Us About Sterling Infrastructure?

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.

Sterling Infrastructure already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Sterling Infrastructure, (below). Of course, keep in mind that there are other factors to consider, too.

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. Hedge funds don't have many shares in Sterling Infrastructure. The Vanguard Group, Inc. is currently the company's largest shareholder with 8.3% of shares outstanding. With 8.1% and 4.8% of the shares outstanding respectively, BlackRock, Inc. and FMR LLC are the second and third largest shareholders. Furthermore, CEO Joseph Cutillo is the owner of 1.4% of the company's shares.

A closer look at our ownership figures suggests that the top 19 shareholders have a combined ownership of 51% implying that no single shareholder has a majority.

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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Sterling Infrastructure

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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.

We can see that insiders own shares in Sterling Infrastructure, Inc.. This is a big company, so it is good to see this level of alignment. Insiders own US$126m worth of shares (at current prices). Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 12% stake in Sterling Infrastructure. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Sterling Infrastructure better, we need to consider many other factors. For example, we've discovered 2 warning signs for Sterling Infrastructure (1 can't be ignored!) that you should be aware of before investing here.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.