Key Insights

• reAlpha Tech's significant insider ownership suggests inherent interests in company's expansion
• 60% of the company is held by a single shareholder (Giri Devanur)
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

Every investor in reAlpha Tech Corp. (NASDAQ:AIRE) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 82% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, insiders scored the highest last week as the company hit US$164m market cap following a 108% gain in the stock.

In the chart below, we zoom in on the different ownership groups of reAlpha Tech.

What Does The Lack Of Institutional Ownership Tell Us About reAlpha Tech?

We don't tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it's not particularly common.

There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. Alternatively, there might be something about the company that has kept institutional investors away. reAlpha Tech's earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.

reAlpha Tech is not owned by hedge funds. With a 60% stake, CEO Giri Devanur is the largest shareholder. This essentially means that they have significant control over the outcome or future of the company, which is why insider ownership is usually looked upon favourably by prospective buyers. For context, the second largest shareholder holds about 6.4% of the shares outstanding, followed by an ownership of 5.2% by the third-largest shareholder.

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 is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of reAlpha Tech

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

Our most recent data indicates that insiders own the majority of reAlpha Tech Corp.. This means they can collectively make decisions for the company. So they have a US$135m stake in this US$164m business. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

With a 17% ownership, the general public, mostly comprising of individual investors, have some degree of sway over reAlpha Tech. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example - reAlpha Tech has 4 warning signs (and 2 which are a bit concerning) we think you should know about.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.