Could The Smart Sand, Inc. (NASDAQ:SND) Ownership Structure Tell Us Something Useful?

By
Simply Wall St
Published
May 26, 2021
NasdaqGS:SND
Source: Shutterstock

If you want to know who really controls Smart Sand, Inc. (NASDAQ:SND), then you'll have to look at the makeup of its share registry. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, 'Don’t tell me what you think, tell me what you have in your portfolio.

With a market capitalization of US$104m, Smart Sand is a small cap stock, so it might not be well known by many institutional investors. Our analysis of the ownership of the company, below, shows that institutions are noticeable on the share registry. We can zoom in on the different ownership groups, to learn more about Smart Sand.

Check out our latest analysis for Smart Sand

ownership-breakdown
NasdaqGS:SND Ownership Breakdown May 26th 2021

What Does The Institutional Ownership Tell Us About Smart Sand?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

As you can see, institutional investors have a fair amount of stake in Smart Sand. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Smart Sand's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
NasdaqGS:SND Earnings and Revenue Growth May 26th 2021

We note that hedge funds don't have a meaningful investment in Smart Sand. Looking at our data, we can see that the largest shareholder is Clearlake Capital Group, L.P. with 25% of shares outstanding. With 13% and 3.3% of the shares outstanding respectively, Keystone Cranberry, LLC and FMR LLC are the second and third largest shareholders. Furthermore, CEO Charles Young is the owner of 1.2% of the company's shares.

On further inspection, we found that more than half the company's shares are owned by the top 7 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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

Insider Ownership Of Smart Sand

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.

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.

I can report that insiders do own shares in Smart Sand, Inc.. In their own names, insiders own US$10m worth of stock in the US$104m company. Some would say this shows alignment of interests between shareholders and the board, though I generally prefer to see bigger insider holdings. But it might be worth checking if those insiders have been selling.

General Public Ownership

With a 33% ownership, the general public have some degree of sway over Smart Sand. 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 25% stake in Smart Sand. 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.

Private Company Ownership

Our data indicates that Private Companies hold 13%, of the company's shares. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

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. For instance, we've identified 5 warning signs for Smart Sand (1 doesn't sit too well with us) that you should be aware of.

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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