Significant control over VerticalScope Holdings by private equity firms implies that the general public has more power to influence management and governance-related decisions
The top 6 shareholders own 52% of the company
To get a sense of who is truly in control of VerticalScope Holdings Inc. (TSE:FORA), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 43% to be precise, is private equity firms. Put another way, the group faces the maximum upside potential (or downside risk).
Individual investors, on the other hand, account for 42% of the company’s stockholders.
Let’s take a closer look to see what the different types of shareholders can tell us about VerticalScope Holdings.
What Does The Institutional Ownership Tell Us About VerticalScope Holdings?
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.
We can see that VerticalScope Holdings 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 VerticalScope Holdings, (below). Of course, keep in mind that there are other factors to consider, too.
Hedge funds don’t have many shares in VerticalScope Holdings. NordStar Capital LP is currently the company’s largest shareholder with 15% of shares outstanding. In comparison, the second and third largest shareholders hold about 15% and 14% of the stock. Furthermore, CEO Robert Laidlaw is the owner of 0.8% of the company’s shares.
We did some more digging and found that 6 of the top shareholders account for roughly 52% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.
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 VerticalScope Holdings
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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
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.
We can report that insiders do own shares in VerticalScope Holdings Inc.. As individuals, the insiders collectively own CA$2.2m worth of the CA$137m company. Some would say this shows alignment of interests between shareholders and the board, though we generally prefer to see bigger insider holdings. But it might be worth checking if those insiders have been selling.
General Public Ownership
The general public– including retail investors — own 42% 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 43%, private equity firms could influence the VerticalScope Holdings 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.
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 – VerticalScope Holdings has 1 warning sign we think you should be aware of.
If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.
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.