Here's What The Cheesecake Factory Incorporated's (NASDAQ:CAKE) Shareholder Ownership Structure Looks Like

By
Simply Wall St
Published
July 08, 2021
NasdaqGS:CAKE
Source: Shutterstock

Every investor in The Cheesecake Factory Incorporated (NASDAQ:CAKE) should be aware of the most powerful shareholder groups. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. Warren Buffett said that he likes "a business with enduring competitive advantages that is run by able and owner-oriented people." So it's nice to see some insider ownership, because it may suggest that management is owner-oriented.

Cheesecake Factory has a market capitalization of US$2.5b, so we would expect some institutional investors to have noticed the stock. In the chart below, we can see that institutions are noticeable on the share registry. We can zoom in on the different ownership groups, to learn more about Cheesecake Factory.

View our latest analysis for Cheesecake Factory

ownership-breakdown
NasdaqGS:CAKE Ownership Breakdown July 8th 2021

What Does The Institutional Ownership Tell Us About Cheesecake Factory?

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.

Cheesecake Factory 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 Cheesecake Factory's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
NasdaqGS:CAKE Earnings and Revenue Growth July 8th 2021

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. We note that hedge funds don't have a meaningful investment in Cheesecake Factory. Our data shows that BlackRock, Inc. is the largest shareholder with 15% of shares outstanding. With 8.7% and 8.4% of the shares outstanding respectively, The Vanguard Group, Inc. and Kayne Anderson Rudnick Investment Management, LLC are the second and third largest shareholders. Additionally, the company's CEO David Overton directly holds 6.4% of the total shares outstanding.

We did some more digging and found that 10 of the top shareholders account for roughly 51% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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 Cheesecake Factory

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.

Shareholders would probably be interested to learn that insiders own shares in The Cheesecake Factory Incorporated. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around US$180m 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

The general public holds a 15% stake in Cheesecake Factory. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

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. For instance, we've identified 4 warning signs for Cheesecake Factory that 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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This article by Simply Wall St is general in nature. 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.
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