Private equity firms invested in Berkshire Grey, Inc. (NASDAQ:BGRY) copped the brunt of last week's US$241m market cap decline

By
Simply Wall St
Published
January 10, 2022
NasdaqGS:BGRY
Source: Shutterstock

If you want to know who really controls Berkshire Grey, Inc. (NASDAQ:BGRY), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are private equity firms with 76% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, private equity firms as a group endured the highest losses last week after market cap fell by US$241m.

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

View our latest analysis for Berkshire Grey

ownership-breakdown
NasdaqGS:BGRY Ownership Breakdown January 10th 2022

What Does The Institutional Ownership Tell Us About Berkshire Grey?

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.

As you can see, institutional investors have a fair amount of stake in Berkshire Grey. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Berkshire Grey, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
NasdaqGS:BGRY Earnings and Revenue Growth January 10th 2022

We note that hedge funds don't have a meaningful investment in Berkshire Grey. Looking at our data, we can see that the largest shareholder is SoftBank Investment Advisers (UK) Limited with 29% of shares outstanding. In comparison, the second and third largest shareholders hold about 25% and 17% of the stock. Additionally, the company's CEO Thomas Wagner directly holds 2.1% of the total shares outstanding.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. 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 Berkshire Grey

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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.

Shareholders would probably be interested to learn that insiders own shares in Berkshire Grey, Inc.. This is a big company, so it is good to see this level of alignment. Insiders own US$32m 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

With a 12% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Berkshire Grey. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Equity Ownership

With an ownership of 76%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Private Company Ownership

Our data indicates that Private Companies hold 4.1%, of the company's shares. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Berkshire Grey better, we need to consider many other factors. Take risks for example - Berkshire Grey 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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