Yahoo Finance Canopy Growth Corporation's (TSE:WEED) last week's 12% decline must have disappointed individual investors who have a significant stake
To get a sense of who is truly in control of Canopy Growth Corporation (TSE:WEED), it is important to understand the ownership structure of the business. We can see that individual investors own the lion's share in the company with 49% 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, individual investors endured the biggest losses as the stock fell by 12%.
In the chart below, we zoom in on the different ownership groups of Canopy Growth.
Check out our latest analysis for Canopy Growth
What Does The Institutional Ownership Tell Us About Canopy Growth?
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 Canopy Growth. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Canopy Growth's earnings history below. Of course, the future is what really matters.
Hedge funds don't have many shares in Canopy Growth. Looking at our data, we can see that the largest shareholder is Constellation Brands, Inc. with 35% of shares outstanding. Contrarius Investment Management Limited is the second largest shareholder owning 4.1% of common stock, and ETF Managers Group LLC holds about 2.3% of the company stock.
Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.
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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Canopy Growth
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.
Our most recent data indicates that insiders own less than 1% of Canopy Growth Corporation. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own CA$1.3m worth of shares. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.
General Public Ownership
The general public-- including retail investors -- own 49% stake in the company, and hence can't 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.
Public Company Ownership
We can see that public companies hold 35% of the Canopy Growth shares on issue. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Canopy Growth better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Canopy Growth (of which 1 is significant!) you should know about.
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.
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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