Exploring ScanSource, Inc. (SCSC) Investor Profile: Who’s Buying and Why?

You're looking at ScanSource, Inc. (SCSC) and asking the right question: who is actually buying this stock, and what do they see that retail investors might be missing? Honestly, the answer is simple: this is an institutional trade, period. With a market capitalization of roughly $827.67 million as of November 2025, a stunning 97.91% of the stock is held by institutional players like Vanguard Group Inc. and Dimensional Fund Advisors LP. That means the big money is running the show.

You see this dynamic play out clearly when you look at the financials: while the company reported full-year 2025 revenue of US$3.04 billion, the story for these funds isn't just about the top line. They are betting on the shift to higher-margin recurring revenue, which is why institutions have collectively bought over 6,273,698 shares recently, even as insiders have offloaded about $6.88 million worth of stock in the last 90 days. It's a classic value-versus-growth tension, so you need to understand the underlying thesis behind their conviction to make your next move.

Who Invests in ScanSource, Inc. (SCSC) and Why?

You're looking at ScanSource, Inc. (SCSC) and trying to figure out who is driving the stock and what their endgame is. The direct takeaway is that this is an overwhelmingly institutional stock, with nearly all the float held by large funds betting on a successful transition to a higher-margin, recurring-revenue model.

The investor base for ScanSource, Inc. is not a mixed bag of retail traders and institutions; it's dominated by professional money. Hedge funds and institutional investors collectively own roughly 97.91% of the company's shares. This means the stock's price movements are largely dictated by the decisions of a few hundred major funds, not individual investors.

Insider ownership is minimal, sitting at approximately 3.18% of the stock, which is a low figure that suggests management's financial incentives are tied more to compensation plans than direct equity ownership. That's a key detail to watch. The big players are the index funds and the quantitative (quant) shops.

Key Investor Types and Their Footprint

The top institutional holders are the giants of passive and factor-based investing. These firms aren't making a high-conviction bet on the company's management; they are buying the stock because it is a component of a major index or fits a specific investment profile, like small-cap value.

The largest shareholders as of late 2025 include:

• BlackRock, Inc.: A passive giant, holding millions of shares for index-tracking funds.
• Vanguard Group Inc: Another major passive investor, often holding for broad market exposure.
• Dimensional Fund Advisors Lp: Known for their factor-based strategies, heavily focused on small-cap and value stocks.
• State Street Corp: A key player in institutional asset management and ETF creation.

Here's a quick look at the holdings of the largest institutional owners:

The sheer concentration of ownership here means that even small rebalancing moves by one of these top five firms can move the stock price defintely.

Investment Motivations: The Hybrid Distribution Thesis

The core motivation for these large funds holding ScanSource, Inc. is the company's shift toward 'hybrid distribution,' which means connecting traditional hardware sales to higher-margin, recurring cloud and Software as a Service (SaaS) revenue. They are looking for a profitable transformation story.

• Recurring Revenue Growth: For the fiscal year 2025, the percentage of gross profit from recurring revenue increased to 32.8%, up from 27.5% in the prior year. This is the most compelling growth metric.
• Profitability and Cash Flow: Fiscal year 2025 non-GAAP net income increased to $85.1 million, or $3.57 per diluted share, an increase of 15.9% year-over-year. Plus, the company generated strong free cash flow of $104.1 million for the year.
• Capital Management: Management is using that strong cash flow for capital return, authorizing a new $200 million share repurchase program in May 2025. They executed $107 million in repurchases for the full fiscal year 2025, which directly boosts earnings per share (EPS).

Here's the quick math: GAAP net income for FY2025 was $71.5 million on net sales of $3.04 billion, indicating a relatively low net margin, but the recurring revenue growth is what promises margin expansion down the line. That's the long-term bet.

Investment Strategies in Play

The strategies used by the dominant investors are a mix of passive exposure and active value hunting, all within the small-cap industrial technology space.

• Passive/Indexing: The huge stakes held by Vanguard and BlackRock are essentially passive bets. They own the stock because it's in the Russell 2000 or the S&P SmallCap 600 indices. They're long-term holders by mandate.
• Value Investing: The presence of firms like Pzena Investment Management and the inclusion in ETFs like the Avantis U.S. Small Cap Value ETF (AVUV) signals a strong value tilt. They see the company as undervalued relative to its assets, cash flow, and future earnings potential, especially as the recurring revenue business scales.
• Active Trading and Rebalancing: Despite the large passive base, there is significant active movement. In a recent quarter, 81 institutional investors added shares while 128 decreased their positions. This churn shows active managers are constantly re-evaluating the stock's place in their portfolios, often driven by short-term earnings results or macro shifts.

What this estimate hides is the risk from insider selling: CEO Michael L. Baur sold 102,031 shares in a single transaction in Q2 2025, worth over $4.5 million. That kind of insider action can signal caution to active investors, even if the fundamentals are improving.

To dig deeper into the company's fundamentals and balance sheet strength, you should read Breaking Down ScanSource, Inc. (SCSC) Financial Health: Key Insights for Investors. Finance: review the Q4 2025 earnings call transcript for management's outlook on recurring revenue growth by next week.

Institutional Ownership and Major Shareholders of ScanSource, Inc. (SCSC)

You want to know who is buying ScanSource, Inc. (SCSC) and why, and the short answer is: the biggest players are already deeply invested, and their recent moves suggest a focus on capital allocation and long-term value. Institutional investors, those massive funds like BlackRock and Vanguard, own a dominant stake, holding approximately 97.91% of the company's stock. That's a huge number, and it tells you the stock's price movements are almost entirely driven by professional money managers.

For a company like ScanSource, Inc., which generated non-GAAP diluted earnings per share (EPS) of $3.57 for the fiscal year 2025, institutional backing provides critical stability. It's a classic small-cap story where the big funds are the primary audience for the investment thesis.

The Top Institutional Investors in ScanSource, Inc.

When you look at the shareholder registry, the names at the top are exactly who you would expect: the index fund giants and a few key value-oriented asset managers. These are the funds that demand a clear path to generating free cash flow and returning capital to shareholders, which ScanSource, Inc. has demonstrated with its strong fiscal year 2025 performance. For instance, the company generated $104.1 million in free cash flow in FY 2025.

Here are the three largest institutional holders, based on the latest available filings, with their positions as of late Q3 2025:

BlackRock, Inc. and The Vanguard Group, Inc. are essentially permanent fixtures, holding shares primarily through passively managed index funds like the iShares and Vanguard ETFs. Dimensional Fund Advisors LP, however, is a more active player, known for its systematic, small-cap value strategy. Their presence suggests a belief that ScanSource, Inc. is currently undervalued based on its fundamentals.

Recent Shifts: Who's Increasing and Decreasing Their Stake?

The recent changes in institutional ownership are a mixed bag, which is defintely typical for a company navigating a transition toward higher-margin recurring revenue. Overall, while some index funds have seen minor reductions due to rebalancing, the total institutional buying volume over the last two years has been significant, totaling approximately 6.3 million shares.

Near-term, the picture is nuanced:

• The Index Giants Trimmed Slightly: Both BlackRock, Inc. and The Vanguard Group, Inc. showed small decreases in their positions in Q3 2025, with Vanguard cutting its stake by 1.13% and BlackRock, Inc. reducing by 2.9% as of June 2025. This is often mechanical, not a strategic bearish signal.
• Strategic Buying Emerges: Firms like LSV Asset Management have been increasing their holdings, adding 64,300 shares as of the Q3 2025 reporting date. This signals conviction from dedicated value managers who see the underlying business model shift-moving toward higher-margin recurring revenue-as a positive catalyst.
• Significant Repurchase Activity: The company itself acted as a major buyer, repurchasing $106.5 million of its own stock in fiscal year 2025. Plus, they announced a new $200 million share repurchase authorization in Q3 FY25. This aggressive capital return strategy is a direct response to shareholder demands and helps boost EPS, a key metric for institutional investors.

The Impact of Major Institutional Investors on Strategy

Large institutional investors don't just hold the stock; they influence the company's direction, especially its capital allocation strategy. When you have nearly 98% institutional ownership, the management team's focus is clear: deliver predictable growth and maximize shareholder returns.

Here's the quick math on their influence: ScanSource, Inc.'s net sales for fiscal year 2025 were $3.04 billion, a 6.7% decrease year-over-year, but non-GAAP adjusted EBITDA increased to $144.7 million. The institutions see the top-line pressure but reward the bottom-line efficiency and the shift to a more profitable mix. They are effectively endorsing the strategy of prioritizing profitability over pure sales volume, especially the push into high-margin recurring revenue, which represented 36.0% of consolidated gross profits in Q3 FY25.

Their collective influence forces a disciplined approach to capital. The new $200 million share repurchase authorization is a direct action to satisfy these investors, signaling that management sees the stock as a good investment. This is a powerful signal. For a deeper dive into the company's financial history and business model, you can check out ScanSource, Inc. (SCSC): History, Ownership, Mission, How It Works & Makes Money.

The next action for you is to monitor the Q4 2025 13F filings to see if the strategic buyers, like the value funds, continue to increase their positions, as this would confirm the market's belief in the company's pivot.

Key Investors and Their Impact on ScanSource, Inc. (SCSC)

If you're looking at ScanSource, Inc. (SCSC), the first thing to understand is that it's an institutional stock-meaning nearly all of its trading volume is driven by large funds, not individual retail investors. This concentration of ownership is a critical factor in how the stock moves and how the company makes its big capital decisions.

As of recent 2025 filings, institutional shareholders own approximately 96.70% of ScanSource, Inc.'s common stock. This is a huge number, and it means the company's strategy is defintely aligned with the priorities of these major funds. The top shareholders are exactly who you'd expect to see holding a large stake in a mid-cap technology distributor.

The Big Three Institutional Shareholders

The investor profile of ScanSource, Inc. is dominated by the world's largest passive and quantitative asset managers. These are not typically 'activist' investors looking to break up the company, but rather passive giants whose sheer size gives them immense influence on governance and capital structure.

Here's a quick look at the three largest institutional holders and their positions based on 2025 data:

BlackRock, Inc. and Vanguard Group Inc. alone command nearly 30% of the company, which is why their portfolio moves are watched closely. Dimensional Fund Advisors LP, known for its systematic, value-oriented approach, rounds out the top three, indicating a strong belief in the company's underlying value proposition.

Recent Moves and Investor Sentiment

Looking at the most recent 13F filings from the third quarter of 2025, there's a subtle but important shift in sentiment among the largest holders. While the overall institutional ownership remains high, some giants have been trimming their positions.

• BlackRock, Inc. cut its stake by nearly 2.9% in its latest reported move.
• Vanguard Group Inc. also reduced its position, albeit slightly, by 1.13%.
• Pzena Investment Management LLC, another top holder, decreased its shares by 3.1% as of November 2025.

To be fair, institutional selling from passive funds doesn't always signal a lack of confidence; sometimes it's just index rebalancing. But still, it suggests a tempered view on the stock's near-term growth relative to other opportunities. On the flip side, LSV Asset Management showed confidence by increasing its stake by 7.1% in the second quarter of 2025, acquiring an additional 35,475 shares.

How Institutional Focus Shapes Company Decisions

With such a concentrated investor base, the company's capital allocation strategy becomes paramount. You're seeing this play out directly in their financial actions. For the fiscal year 2025, ScanSource, Inc. reported a total of $106.5 million in share repurchases. This is a massive capital return to shareholders.

Here's the quick math: The company's full-year 2025 non-GAAP diluted EPS was $3.57, and their adjusted EBITDA hit $144.7 million. Generating strong free cash flow-$104.1 million for FY2025-gives management the flexibility to execute these buybacks. This focus on returning cash is a direct response to the preference of large, value-oriented institutional investors who favor a clear path to capital return over pure M&A-driven growth.

The company further solidified this commitment by announcing a new $200 million share repurchase authorization in Q3 2025. This action, which signals management's confidence in the stock being undervalued, is a key way they appease and reward their dominant institutional base. It's a clear action: use the strong cash flow to reduce the share count, which helps boost earnings per share (EPS). For more on the strategic direction driving these numbers, you can read the Mission Statement, Vision, & Core Values of ScanSource, Inc. (SCSC).

Market Impact and Investor Sentiment

You're looking at ScanSource, Inc. (SCSC) and trying to figure out if the big money is still interested, and honestly, the picture is mixed. Institutional conviction remains high, but insider actions are flashing a red light you can't ignore. Hedge funds and institutional investors collectively own roughly 97.91% of the company, which is a huge vote of confidence in the long-term business model, but key executives are quietly selling.

The overall investor sentiment is best described as cautiously positive on the business transformation, but negative on the stock's near-term price action. For example, while the Vanguard Group Inc. still holds over 2.7 million shares, making it a top holder with a 12.453% stake, they slightly trimmed their position by 1.1% as of November 2025. This kind of minor selling from a passive giant isn't a panic, but it does reflect a lack of urgency to buy more at current prices.

• Institutional ownership is strong, but not aggressive.
• Insider selling is a clear, negative signal.
• The market cap sits at about $893.279 million as of mid-November 2025.

The Insider Selling Signal: A Real-World Caveat

Here's the quick math on why you should care about insider moves: ScanSource, Inc.'s CEO, Michael L. Baur, significantly reduced his stake, selling 102,031 shares. That's a 30.96% reduction in his holdings. In the last 90 days, insiders have offloaded a total of 153,677 shares worth about $6.88 million in open-market transactions. When the people who know the business best are selling, it suggests they see less upside than the public might. What this estimate hides is that a good portion of insider transactions are often low-impact stock awards, but the high-impact open-market sales are what really matter.

Still, some institutional investors are buying. LSV Asset Management increased its stake by 7.1%, acquiring an additional 35,475 shares, which shows targeted buying interest from value-focused funds. You need to weigh the conviction of the buyers against the actions of the sellers. For a deeper dive into the company's foundation, check out Breaking Down ScanSource, Inc. (SCSC) Financial Health: Key Insights for Investors.

Recent Market Reactions and Volatility

The stock market's response to ScanSource, Inc.'s financial performance in 2025 has been a classic example of 'beat on earnings, miss on revenue.' After the Q4 fiscal year 2025 results were announced in August, the market reacted strongly to the earnings beat. The stock price jumped by 12.00% the next day, as the company reported non-GAAP diluted EPS of $1.02, beating the consensus estimate.

However, the overall trend has been challenging. The stock was down 17.73% in 2025 through November, and in the 10 days leading up to mid-November, the price fell by -5.12%. This suggests that while quarterly beats provide a short-term pop, the broader market is worried about the 6.7% year-over-year net sales decrease to $3.04 billion for the full fiscal year 2025. The company's move to authorize a new $200 million share repurchase program in May 2025 was a clear attempt to provide a floor for the stock price and return capital to shareholders.

Analyst Perspectives: A Consensus of 'Hold'

Wall Street analysts are defintely not rushing to put a 'Strong Buy' on ScanSource, Inc. The consensus rating is a solid Hold, with three analysts suggesting a Hold and only one a Buy. This neutral stance is often a sign that analysts see the company as fairly valued, mapping out a modest upside but acknowledging risks.

The average 12-month price target is set at $42.50, which suggests a potential upside of about 12.67% from a recent trading price. The most compelling argument for the future is the company's focus on higher-margin recurring revenue, which grew to represent 32.8% of consolidated gross profit in FY2025, up from 27.5% in the prior year. This shift is a key driver of the improved profitability, which is why analysts forecast an annual earnings growth rate of 28.81%, beating the industry's average forecast of 27.35%.

The analyst's hold rating reflects a wait-and-see approach: the business model is improving, but the top-line revenue decline and insider selling mean you need to see a few more quarters of clean execution before going all-in.