Private equity firms are Tigo Energy, Inc.'s (NASDAQ:TYGO) biggest owners and were rewarded after market cap rose by US$20m last week

Key Insights

• The considerable ownership by private equity firms in Tigo Energy indicates that they collectively have a greater say in management and business strategy
• The top 3 shareholders own 53% of the company
• 14% of Tigo Energy is held by Institutions

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To get a sense of who is truly in control of Tigo Energy, Inc. (NASDAQ:TYGO), 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 48% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, private equity firms were the biggest beneficiaries of last week’s 21% gain.

Let's delve deeper into each type of owner of Tigo Energy, beginning with the chart below.

Check out our latest analysis for Tigo Energy

What Does The Institutional Ownership Tell Us About Tigo Energy?

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.

Tigo Energy already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Tigo Energy's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Tigo Energy. The company's largest shareholder is Energy Growth Momentum LLP, with ownership of 22%. Alon Ventures is the second largest shareholder owning 19% of common stock, and Generation Investment Management LLP holds about 12% of the company stock. Furthermore, CEO Zvi Alon is the owner of 3.5% of the company's shares.

A more detailed study of the shareholder registry showed us that 3 of the top shareholders have a considerable amount of ownership in the company, via their 53% stake.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Tigo Energy

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 some shares in Tigo Energy, Inc.. It has a market capitalization of just US$112m, and insiders have US$8.3m worth of shares, in their own names. 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, who are usually individual investors, hold a 31% stake in Tigo Energy. 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 an ownership of 48%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Tigo Energy is showing 2 warning signs in our investment analysis , you should know about...

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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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.