Institutional investors are Sleep Country Canada Holdings Inc.'s (TSE:ZZZ) biggest bettors and were rewarded after last week's CA$78m market cap gain

By
Simply Wall St
Published
January 13, 2022
TSX:ZZZ
Source: Shutterstock

A look at the shareholders of Sleep Country Canada Holdings Inc. (TSE:ZZZ) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are institutions with 58% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Last week’s 5.9% gain means that institutional investors were on the positive end of the spectrum even as the company has shown strong longer-term trends. The one-year return on investment is currently 43% and last week's gain would have been more than welcomed.

In the chart below, we zoom in on the different ownership groups of Sleep Country Canada Holdings.

View our latest analysis for Sleep Country Canada Holdings

ownership-breakdown
TSX:ZZZ Ownership Breakdown January 13th 2022

What Does The Institutional Ownership Tell Us About Sleep Country Canada Holdings?

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.

As you can see, institutional investors have a fair amount of stake in Sleep Country Canada Holdings. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Sleep Country Canada Holdings, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
TSX:ZZZ Earnings and Revenue Growth January 13th 2022

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Hedge funds don't have many shares in Sleep Country Canada Holdings. Mawer Investment Management Limited is currently the company's largest shareholder with 13% of shares outstanding. FMR LLC is the second largest shareholder owning 10% of common stock, and Burgundy Asset Management Ltd. holds about 9.6% of the company stock. In addition, we found that Stewart Schaefer, the CEO has 0.6% of the shares allocated to their name.

Looking at the shareholder registry, we can see that 51% of the ownership is controlled by the top 12 shareholders, meaning that no single shareholder has a majority interest in the ownership.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Sleep Country Canada 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. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

We can see that insiders own shares in Sleep Country Canada Holdings Inc.. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around CA$41m worth of shares (at current prices). If you would like to explore the question of insider alignment, you can click here to see if insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 39% stake in Sleep Country Canada Holdings. 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.

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. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Sleep Country Canada Holdings you should know about.

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.

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