- Significant control over Cyxtera Technologies by private equity firms implies that the general public has more power to influence management and governance-related decisions
- 51% of the business is held by the top 3 shareholders
- 21% of Cyxtera Technologies is held by Institutions
Every investor in Cyxtera Technologies, Inc. (NASDAQ:CYXT) should be aware of the most powerful shareholder groups. We can see that private equity firms own the lion’s share in the company with 46% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
While the holdings of private equity firms took a hit after last week’s 22% price drop, institutions with their 21% holdings also suffered.
Let’s delve deeper into each type of owner of Cyxtera Technologies, beginning with the chart below.
View our latest analysis for Cyxtera Technologies
What Does The Institutional Ownership Tell Us About Cyxtera Technologies?
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it’s included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.
As you can see, institutional investors have a fair amount of stake in Cyxtera Technologies. 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. 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 Cyxtera Technologies’ historic earnings and revenue below, but keep in mind there’s always more to the story.
It looks like hedge funds own 12% of Cyxtera Technologies shares. That’s interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. The company’s largest shareholder is BC Partners, with ownership of 27%. With 13% and 12% of the shares outstanding respectively, Medina Capital and Starboard Value LP are the second and third largest shareholders.
After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company’s shares, implying that they have considerable power to influence the company’s decisions.
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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Cyxtera Technologies
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. 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 data suggests that insiders own under 1% of Cyxtera Technologies, Inc. in their own names. It appears that the board holds about US$2.4m worth of stock. This compares to a market capitalization of US$330m. We generally like to see a board more invested. However it might be worth checking if those insiders have been buying.
General Public Ownership
With a 15% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Cyxtera Technologies. 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.
Private Equity Ownership
Private equity firms hold a 46% stake in Cyxtera Technologies. This suggests they can be influential in key policy decisions. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and — as the name suggests — don’t invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.
Public Company Ownership
It appears to us that public companies own 6.4% of Cyxtera Technologies. We can’t be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.
I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Consider risks, for instance. Every company has them, and we’ve spotted 2 warning signs for Cyxtera Technologies you should know about.
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.