Biglari Holdings Inc.'s (NYSE:BH.A) hedge funds investors lost 5.8% last week but have benefitted from longer-term gains

Key Insights

• Significantly high institutional ownership implies Biglari Holdings' stock price is sensitive to their trading actions
• Biglari Capital LLC owns 70% of the company
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

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If you want to know who really controls Biglari Holdings Inc. (NYSE:BH.A), 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 70% to be precise, is hedge funds. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Losing money on investments is something no shareholder enjoys, least of all hedge funds investors who saw their holdings value drop by 5.8% last week. However, the 103% one-year returns may have helped alleviate their overall losses. But they would probably be wary of future losses.

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

See our latest analysis for Biglari Holdings

What Does The Institutional Ownership Tell Us About Biglari Holdings?

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.

As you can see, institutional investors have a fair amount of stake in Biglari Holdings. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Biglari Holdings, (below). Of course, keep in mind that there are other factors to consider, too.

It looks like hedge funds own 70% of Biglari Holdings shares. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. Biglari Capital LLC is currently the largest shareholder, with 70% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. Dimensional Fund Advisors LP is the second largest shareholder owning 3.9% of common stock, and GAMCO Investors, Inc. holds about 2.2% of the company stock.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Biglari Holdings

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.

Our most recent data indicates that insiders own less than 1% of Biglari Holdings Inc.. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own US$4.7m worth of shares. Arguably, recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 11% stake in Biglari Holdings. 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Biglari Holdings , and understanding them should be part of your investment process.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.