Yahoo Finance Private equity firms invested in Soho House & Co Inc. (NYSE:SHCO) up 8.2% last week, insiders too were rewarded
Key Insights
Soho House & Co's significant private equity firms ownership suggests that the key decisions are influenced by shareholders from the larger public
A total of 2 investors have a majority stake in the company with 61% ownership
If you want to know who really controls Soho House & Co Inc. (NYSE:SHCO), then you'll have to look at the makeup of its share registry. We can see that private equity firms own the lion's share in the company with 40% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
While private equity firms were the group that benefitted the most from last week’s US$81m market cap gain, insiders too had a 34% share in those profits.
Let's delve deeper into each type of owner of Soho House & Co, beginning with the chart below.
See our latest analysis for Soho House & Co
What Does The Institutional Ownership Tell Us About Soho House & Co?
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 Soho House & Co does have institutional investors; and they hold a good portion of the company's stock. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Soho House & Co, (below). Of course, keep in mind that there are other factors to consider, too.
We note that hedge funds don't have a meaningful investment in Soho House & Co. The company's largest shareholder is The Yucaipa Companies, LLC, with ownership of 40%. With 21% and 8.0% of the shares outstanding respectively, Richard Caring and Goldman Sachs Group, Investment Banking and Securities Investments are the second and third largest shareholders.
To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence 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 understand of a stock's expected performance. 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 Soho House & Co
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.
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 a reasonable proportion of Soho House & Co Inc.. It is very interesting to see that insiders have a meaningful US$348m stake in this US$1.0b business. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.
General Public Ownership
The general public-- including retail investors -- own 10% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Private Equity Ownership
With a stake of 40%, private equity firms could influence the Soho House & Co 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 Soho House & Co better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Soho House & Co (at least 1 which is a bit concerning) , and understanding them should be part of your investment process.
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.
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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
