Paymentus Holdings, Inc.'s (NYSE:PAY) stock price dropped 3.6% last week; private equity firms would not be happy

Key Insights

• The considerable ownership by private equity firms in Paymentus Holdings indicates that they collectively have a greater say in management and business strategy
• 55% of the company is held by a single shareholder (Accel-KKR LLC)
• Insiders have sold recently

A look at the shareholders of Paymentus Holdings, Inc. (NYSE:PAY) can tell us which group is most powerful. The group holding the most number of shares in the company, around 55% to be precise, is private equity firms. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While insiders who own 20% came under pressure after market cap dropped to US$3.9b last week,private equity firms took the most losses.

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

View our latest analysis for Paymentus Holdings

What Does The Institutional Ownership Tell Us About Paymentus 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.

Paymentus Holdings 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 Paymentus Holdings, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Paymentus Holdings. The company's largest shareholder is Accel-KKR LLC, with ownership of 55%. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. Meanwhile, the second and third largest shareholders, hold 16% and 2.8%, of the shares outstanding, respectively. Dushyant Sharma, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

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 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 Paymentus Holdings

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.

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.

Our information suggests that insiders maintain a significant holding in Paymentus Holdings, Inc.. Insiders own US$780m worth of shares in the US$3.9b company. That's quite meaningful. 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, who are usually individual investors, hold a 11% stake in Paymentus Holdings. 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 55%, 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 Paymentus Holdings better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Paymentus Holdings you should know about.

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. 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.