Private equity firms in Aedas Homes, S.A. (BME:AEDAS) are its biggest bettors, and their bets paid off as stock gained 7.7% last week

Key Insights

• Significant control over Aedas Homes by private equity firms implies that the general public has more power to influence management and governance-related decisions
• 80% of the company is held by a single shareholder (Castlelake, L.P.)
• Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock

If you want to know who really controls Aedas Homes, S.A. (BME:AEDAS), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 80% to be precise, is private equity firms. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Clearly, private equity firms benefitted the most after the company's market cap rose by €64m last week.

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

Check out our latest analysis for Aedas Homes

What Does The Institutional Ownership Tell Us About Aedas Homes?

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 Aedas Homes does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Aedas Homes' historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Aedas Homes. Looking at our data, we can see that the largest shareholder is Castlelake, L.P. with 80% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. T. Rowe Price Group, Inc. is the second largest shareholder owning 5.5% of common stock, and Mutuactivos SGIIC, SAU holds about 0.6% of the company stock.

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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Aedas Homes

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own less than 1% of Aedas Homes, S.A.. It is a pretty big company, so it would be possible for board members to own a meaningful interest in the company, without owning much of a proportional interest. In this case, they own around €7.6m worth of shares (at current prices). It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 10% stake in Aedas Homes. 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 80%, private equity firms could influence the Aedas Homes board. 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.

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 for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Aedas Homes (at least 2 which are a bit concerning) , and understanding them should be part of your investment process.

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.