Key Insights
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The considerable ownership by private equity firms in Coveo Solutions indicates that they collectively have a greater say in management and business strategy
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The top 3 shareholders own 50% of the company
A look at the shareholders of Coveo Solutions Inc. (TSE:CVO) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are private equity firms with 25% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
And hedge funds on the other hand have a 25% ownership in the company.
Let’s take a closer look to see what the different types of shareholders can tell us about Coveo Solutions.
See our latest analysis for Coveo Solutions
What Does The Institutional Ownership Tell Us About Coveo Solutions?
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.
We can see that Coveo Solutions 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. 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 Coveo Solutions’ historic earnings and revenue below, but keep in mind there’s always more to the story.
Our data indicates that hedge funds own 25% of Coveo Solutions. 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 Elliott Management Corporation, with ownership of 25%. Meanwhile, the second and third largest shareholders, hold 13% and 12%, of the shares outstanding, respectively. Additionally, the company’s CEO Louis Tetu directly holds 3.5% of the total shares outstanding.
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 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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Coveo Solutions
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 some shares in Coveo Solutions Inc.. As individuals, the insiders collectively own CA$50m worth of the CA$1.1b company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public– including retail investors — own 24% 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
Private equity firms hold a 25% stake in Coveo Solutions. This suggests they can be influential in key policy decisions. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.
Private Company Ownership
We can see that Private Companies own 9.6%, of the shares on issue. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.
Next Steps:
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. Take risks for example – Coveo Solutions has 1 warning sign we think you should be aware of.
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.
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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.
