Insiders own 51% of Sezzle Inc. (NASDAQ:SEZL) in spite of selling recently and the recent dip may have hurt them

Key Insights

• Sezzle's significant insider ownership suggests inherent interests in company's expansion
• The top 2 shareholders own 51% of the company
• Insiders have sold recently

Every investor in Sezzle Inc. (NASDAQ:SEZL) should be aware of the most powerful shareholder groups. With 51% stake, individual insiders possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

Despite selling some shares recently, insiders control a good portion of the company's stock. As a result, they were also the group to endure the biggest losses as the stock fell by 12%.

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

View our latest analysis for Sezzle

What Does The Institutional Ownership Tell Us About Sezzle?

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.

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

Hedge funds don't have many shares in Sezzle. With a 44% stake, CEO Charles Youakim is the largest shareholder. With 7.2% and 4.2% of the shares outstanding respectively, Continental Investment Partners SA and Paul Paradis are the second and third largest shareholders. Interestingly, the third-largest shareholder, Paul Paradis is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 51% stake.

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 is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Sezzle

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.

It seems that insiders own more than half the Sezzle Inc. stock. This gives them a lot of power. That means insiders have a very meaningful US$654m stake in this US$1.3b business. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if they have been selling down their stake.

General Public Ownership

With a 24% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Sezzle. 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

Private equity firms hold a 7.2% stake in Sezzle. This suggests they can be influential in key policy decisions. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Sezzle (at least 2 which are a bit concerning) , and understanding them should be part of your investment process.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.