Significant insider control over Rumble implies vested interests in company growth

A total of 4 investors have a majority stake in the company with 52% ownership

Insiders have been selling lately

A look at the shareholders of Rumble Inc. (NASDAQ:RUM) can tell us which group is most powerful. We can see that individual insiders own the lion’s share in the company with 53% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Despite selling some shares recently, insiders control a good portion of the company’s stock. As a result, the group bore the brunt of last week’s US$171m market cap loss.

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

Check out our latest analysis for Rumble

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.

Rumble already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Rumble’s earnings history below. Of course, the future is what really matters.

Rumble is not owned by hedge funds. The company’s CEO Christopher Pavlovski is the largest shareholder with 37% of shares outstanding. Daniel Bongino is the second largest shareholder owning 5.8% of common stock, and Robert Arsov holds about 5.3% of the company stock. Interestingly, the third-largest shareholder, Robert Arsov is also a Lead Director, again, indicating strong insider ownership amongst the company’s top shareholders.

On looking further, we found that 52% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understanding of a stock’s expected performance. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

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.

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.

Our information suggests that insiders own more than half of Rumble Inc.. This gives them effective control of the company. That means insiders have a very meaningful US$1.0b stake in this US$1.9b business. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if they have been selling down their stake.

With a 38% ownership, the general public, mostly comprising individual investors, have some degree of sway over Rumble. 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.

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we’ve discovered 2 warning signs for Rumble that you should be aware of before investing here.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com