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Could The Okta, Inc. (NASDAQ:OKTA) Ownership Structure Tell

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Could The Okta, Inc. (NASDAQ:OKTA) Ownership Structure Tell Us Something Useful?
By: Simply Wall St | January 28, 2021

If you want to know who really controls Okta, Inc. (NASDAQ:OKTA), then you'll have to look at the makeup of its share registry. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies. Warren Buffett said that he likes "a business with enduring competitive advantages that is run by able and owner-oriented people." So it's nice to see some insider ownership, because it may suggest that management is owner-oriented.

Okta is a pretty big company. It has a market capitalization of US$33b. Normally institutions would own a significant portion of a company this size. In the chart below, we can see that institutions are noticeable on the share registry. Let's take a closer look to see what the different types of shareholders can tell us about Okta.

What Does The Institutional Ownership Tell Us About Okta?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

We can see that Okta does have institutional investors; and they hold a good portion of the company's stock. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Okta's earnings history below. Of course, the future is what really matters.

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. Okta is not owned by hedge funds. Morgan Stanley Investment Management Inc. is currently the largest shareholder, with 9.7% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 8.3% and 7.2%, of the shares outstanding, respectively. Additionally, the company's CEO Todd McKinnon directly holds 4.1% of the total shares outstanding.

Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 13 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Okta

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.

I can report that insiders do own shares in Okta, Inc.. Insiders own US$2.2b worth of shares (at current prices). I sometimes take an interest in whether they have been buying or selling.

General Public Ownership

The general public, with a 15% stake in the company, will not easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies...

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Read Full Story »»»


Information posted to this board is not meant to suggest any specific action, but to point out the technical signs that can help our readers make their own specific decisions. Caveat emptor!
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