Barrett Business Services, Inc.’s (NASDAQ:BBSI) large institutional owners must be happy as stock continues to impress, up 6.1% over the past week

Barrett Business Services, Inc.’s (NASDAQ:BBSI) large institutional owners must be happy as stock continues to impress, up 6.1% over the past week

Key Insights

  • Institutions’ substantial holdings in Barrett Business Services implies that they have significant influence over the company’s share price
  • A total of 14 investors have a majority stake in the company with 51% ownership
  • Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business

Every investor in Barrett Business Services, Inc. (NASDAQ:BBSI) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are institutions with 84% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And last week, institutional investors ended up benefitting the most after the company hit US$842m in market cap. The one-year return on investment is currently 53% and last week’s gain would have been more than welcomed.

Let’s delve deeper into each type of owner of Barrett Business Services, beginning with the chart below.

See our latest analysis for Barrett Business Services

Barrett Business Services, Inc.’s (NASDAQ:BBSI) large institutional owners must be happy as stock continues to impress, up 6.1% over the past week
NasdaqGS:BBSI Ownership Breakdown June 1st 2024

What Does The Institutional Ownership Tell Us About Barrett Business Services?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it’s included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

As you can see, institutional investors have a fair amount of stake in Barrett Business Services. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Barrett Business Services’ historic earnings and revenue below, but keep in mind there’s always more to the story.

earnings-and-revenue-growth
NasdaqGS:BBSI Earnings and Revenue Growth June 1st 2024

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. We note that hedge funds don’t have a meaningful investment in Barrett Business Services. BlackRock, Inc. is currently the largest shareholder, with 7.7% of shares outstanding. The Vanguard Group, Inc. is the second largest shareholder owning 5.8% of common stock, and Private Capital Management, LLC holds about 5.1% of the company stock. Furthermore, CEO Gary Kramer is the owner of 0.9% of the company’s shares.

After doing some more digging, we found that the top 14 have the combined ownership of 51% in the company, suggesting that no single shareholder has significant control over the company.

Researching institutional ownership is a good way to gauge and filter a stock’s expected performance. The same can be achieved by studying analyst sentiments. 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 Barrett Business Services

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.

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.

We can report that insiders do own shares in Barrett Business Services, Inc.. It has a market capitalization of just US$842m, and insiders have US$25m worth of shares, in their own names. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 13% stake in Barrett Business Services. 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:

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.

I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow, for free.

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.

Valuation is complex, but we’re helping make it simple.

Find out whether Barrett Business Services is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.