What Is The Ownership Structure Like For Sweetgreen, Inc. (NYSE:SG)?

By
Simply Wall St
Published
April 11, 2022
NYSE:SG
Source: Shutterstock

The big shareholder groups in Sweetgreen, Inc. (NYSE:SG) have power over the company. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of 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.

Sweetgreen has a market capitalization of US$3.1b, so it's too big to fly under the radar. We'd expect to see both institutions and retail investors owning a portion of the company. In the chart below, we can see that institutions own shares in the company. Let's delve deeper into each type of owner, to discover more about Sweetgreen.

Check out our latest analysis for Sweetgreen

ownership-breakdown
NYSE:SG Ownership Breakdown April 11th 2022

What Does The Institutional Ownership Tell Us About Sweetgreen?

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.

Sweetgreen already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Sweetgreen, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
NYSE:SG Earnings and Revenue Growth April 11th 2022

It looks like hedge funds own 5.6% of Sweetgreen shares. That's interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. The company's largest shareholder is FMR LLC, with ownership of 11%. In comparison, the second and third largest shareholders hold about 9.6% and 5.7% of the stock. Furthermore, CEO Jonathan Neman is the owner of 5.4% of the company's shares.

We also observed that the top 8 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Sweetgreen

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

It seems insiders own a significant proportion of Sweetgreen, Inc.. It is very interesting to see that insiders have a meaningful US$451m stake in this US$3.1b business. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 25% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

With an ownership of 5.7%, 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Sweetgreen better, we need to consider many other factors. Take risks for example - Sweetgreen has 2 warning signs we think you should be aware of.

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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