Private equity firms in Tigo Energy, Inc. (NASDAQ:TYGO) are its biggest bettors, and their bets paid off as stock gained 13% 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
• 58% of the business is held by the top 3 shareholders
• Insider ownership in Tigo Energy is 13%

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. With 52% stake, private equity firms possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Clearly, private equity firms benefitted the most after the company's market cap rose by US$11m last week.

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

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.

We can see that Tigo Energy 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. 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.

Hedge funds don't have many shares in Tigo Energy. The company's largest shareholder is Energy Growth Momentum LLP, with ownership of 24%. For context, the second largest shareholder holds about 21% of the shares outstanding, followed by an ownership of 13% by the third-largest shareholder. Additionally, the company's CEO Zvi Alon directly holds 3.5% of the total shares outstanding.

To make our study more interesting, we found that the top 3 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 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.

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 Tigo Energy, Inc.. It has a market capitalization of just US$103m, and insiders have US$13m worth of shares in their own names. 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 19% 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 52%, private equity firms could influence the Tigo Energy 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 Tigo Energy is showing 4 warning signs in our investment analysis , and 1 of those is potentially serious...

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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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com