Institutions along with private equity firms who hold considerable shares inAdvantage Solutions Inc. (NASDAQ:ADV) come under pressure; lose 20% of holdings value

Key Insights

• Significant control over Advantage Solutions by private equity firms implies that the general public has more power to influence management and governance-related decisions
• 56% of the company is held by a single shareholder (Leonard Green & Partners, L.P.)
• Insiders have been buying lately

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Every investor in Advantage Solutions Inc. (NASDAQ:ADV) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are private equity firms with 56% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While institutions who own 31% came under pressure after market cap dropped to US$402m last week,private equity firms took the most losses.

In the chart below, we zoom in on the different ownership groups of Advantage Solutions.

Check out our latest analysis for Advantage Solutions

What Does The Institutional Ownership Tell Us About Advantage Solutions?

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.

We can see that Advantage Solutions 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. 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 Advantage Solutions, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Advantage Solutions. Looking at our data, we can see that the largest shareholder is Leonard Green & Partners, L.P. with 56% of shares outstanding. This implies that they have majority interest control of the future of the company. With 4.8% and 4.6% of the shares outstanding respectively, CVC Capital Partners plc and T. Rowe Price Group, Inc. are the second and third largest shareholders. Furthermore, CEO David Peacock is the owner of 0.7% of the company's shares.

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

Insider Ownership Of Advantage Solutions

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.

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 some shares in Advantage Solutions Inc.. As individuals, the insiders collectively own US$8.5m worth of the US$402m company. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public-- including retail investors -- own 11% stake in the company, and hence can't easily be ignored. 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.

Private Equity Ownership

With an ownership of 56%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Advantage Solutions is showing 1 warning sign in our investment analysis , you should know about...

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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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.