Yahoo Finance Both private equity firms who control a good portion of Genius Sports Limited (NYSE:GENI) along with institutions must be dismayed after last week's 24% decrease
Every investor in Genius Sports Limited (NYSE:GENI) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are private equity firms with 30% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
While institutions, who own 26% shares weren’t spared from last week’s US$228m market cap drop, private equity firms as a group suffered the maximum losses
Let's delve deeper into each type of owner of Genius Sports, beginning with the chart below.
View our latest analysis for Genius Sports
What Does The Institutional Ownership Tell Us About Genius Sports?
Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.
As you can see, institutional investors have a fair amount of stake in Genius Sports. 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 Genius Sports' historic earnings and revenue below, but keep in mind there's always more to the story.
It would appear that 9.2% of Genius Sports shares are controlled by hedge funds. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Apax Partners LLP is currently the largest shareholder, with 30% of shares outstanding. Mark Locke is the second largest shareholder owning 11% of common stock, and Caledonia (Private) Investments Pty Limited holds about 9.2% of the company stock. Mark Locke, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.
On looking further, we found that 54% 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 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 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 Genius Sports
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. 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.
Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.
Our most recent data indicates that insiders own a reasonable proportion of Genius Sports Limited. Insiders own US$139m worth of shares in the US$717m company. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.
General Public Ownership
The general public, who are usually individual investors, hold a 14% stake in Genius Sports. 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.
Private Equity Ownership
With a stake of 30%, private equity firms could influence the Genius Sports board. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Genius Sports better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with Genius Sports .
If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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