Guardian Pharmacy Services, Inc.'s (NYSE:GRDN) market cap dropped US$55m last week; Private equity firms bore the brunt

Key Insights

• The considerable ownership by private equity firms in Guardian Pharmacy Services indicates that they collectively have a greater say in management and business strategy
• 56% of the business is held by the top 3 shareholders
• 25% of Guardian Pharmacy Services is held by insiders

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Every investor in Guardian Pharmacy Services, Inc. (NYSE:GRDN) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are private equity firms with 39% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Following a 4.1% decrease in the stock price last week, private equity firms suffered the most losses, but insiders who own 25% stock also took a hit.

Let's delve deeper into each type of owner of Guardian Pharmacy Services, beginning with the chart below.

View our latest analysis for Guardian Pharmacy Services

What Does The Institutional Ownership Tell Us About Guardian Pharmacy Services?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

As you can see, institutional investors have a fair amount of stake in Guardian Pharmacy Services. 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. 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 Guardian Pharmacy Services' 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 Guardian Pharmacy Services. The company's largest shareholder is Bindley Capital Partners, LLC, with ownership of 39%. For context, the second largest shareholder holds about 8.9% of the shares outstanding, followed by an ownership of 8.2% by the third-largest shareholder. Fred Burke, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

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.

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. 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 Guardian Pharmacy Services

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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.

Our most recent data indicates that insiders own a reasonable proportion of Guardian Pharmacy Services, Inc.. Insiders own US$340m worth of shares in the US$1.4b company. That's quite meaningful. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

With a 18% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Guardian Pharmacy Services. 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 39%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. 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.

I always like to check for a history of revenue growth. You can too, by accessing this free chart of historic revenue and earnings in this detailed graph.

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.