Institutional investors are PlayAGS, Inc.'s (NYSE:AGS) biggest bettors and were rewarded after last week's US$27m market cap gain

By
Simply Wall St
Published
January 19, 2022
NYSE:AGS
Source: Shutterstock

If you want to know who really controls PlayAGS, Inc. (NYSE:AGS), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 43% to be precise, is institutions. Put another way, the group faces the maximum upside potential (or downside risk).

And as as result, institutional investors reaped the most rewards after the company's stock price gained 11% last week. The gains from last week would have further boosted the one-year return to shareholders which currently stand at 26%.

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

Check out our latest analysis for PlayAGS

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NYSE:AGS Ownership Breakdown January 19th 2022

What Does The Institutional Ownership Tell Us About PlayAGS?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

We can see that PlayAGS does have institutional investors; and they hold a good portion of the company's stock. 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. 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 PlayAGS' historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
NYSE:AGS Earnings and Revenue Growth January 19th 2022

Our data indicates that hedge funds own 17% of PlayAGS. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Apollo Global Management, Inc. is currently the company's largest shareholder with 22% of shares outstanding. In comparison, the second and third largest shareholders hold about 9.5% and 7.2% of the stock. Additionally, the company's CEO David Lopez directly holds 0.6% of the total shares outstanding.

On further inspection, we found that more than half the company's shares are owned by the top 6 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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

Insider Ownership Of PlayAGS

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 PlayAGS, Inc.. As individuals, the insiders collectively own US$3.9m worth of the US$279m company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 17% ownership, the general public, mostly comprising of individual investors, have some degree of sway over PlayAGS. 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 22%, 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand PlayAGS better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for PlayAGS you should know about.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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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