Genesis Land Development Corp.'s (TSE:GDC) market cap rose CA$19m last week; private equity firms who hold 56% profited and so did insiders

Key Insights

• The considerable ownership by private equity firms in Genesis Land Development indicates that they collectively have a greater say in management and business strategy
• The largest shareholder of the company is Smoothwater Capital Corporation with a 56% stake
• Insiders own 20% of Genesis Land Development

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To get a sense of who is truly in control of Genesis Land Development Corp. (TSE:GDC), it is important to understand the ownership structure of the business. We can see that private equity firms own the lion's share in the company with 56% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While private equity firms were the group that reaped the most benefits after last week’s 11% price gain, insiders also received a 20% cut.

Let's take a closer look to see what the different types of shareholders can tell us about Genesis Land Development.

View our latest analysis for Genesis Land Development

What Does The Institutional Ownership Tell Us About Genesis Land Development?

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 Genesis Land Development 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 Genesis Land Development, (below). Of course, keep in mind that there are other factors to consider, too.

Genesis Land Development is not owned by hedge funds. The company's largest shareholder is Smoothwater Capital Corporation, with ownership of 56%. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. Mark Mitchell is the second largest shareholder owning 20% of common stock, and FMR LLC holds about 8.4% of the company stock.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Genesis Land Development

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.

It seems insiders own a significant proportion of Genesis Land Development Corp.. Insiders own CA$37m worth of shares in the CA$186m company. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 14% 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.

Private Equity Ownership

With a stake of 56%, private equity firms could influence the Genesis Land Development 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:

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. Be aware that Genesis Land Development is showing 2 warning signs in our investment analysis , and 1 of those is a bit concerning...

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.