Painful week for private equity firms invested in Advantage Solutions Inc. (NASDAQ:ADV) after 8.9% drop, institutions also suffered losses

Key Insights

• The considerable ownership by private equity firms in Advantage Solutions indicates that they collectively have a greater say in management and business strategy
• 56% of the company is held by a single shareholder (Leonard Green & Partners, L.P.)
• Recent sales by insiders

If you want to know who really controls Advantage Solutions Inc. (NASDAQ:ADV), then you'll have to look at the makeup of its share registry. 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).

Following a 8.9% decrease in the stock price last week, private equity firms suffered the most losses, but institutions who own 31% stock also took a hit.

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

Check out our latest analysis for Advantage Solutions

What Does The Institutional Ownership Tell Us About Advantage Solutions?

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.

As you can see, institutional investors have a fair amount of stake in Advantage Solutions. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Advantage Solutions' historic earnings and revenue below, but keep in mind there's always more to the story.

Advantage Solutions is not owned by hedge funds. Leonard Green & Partners, L.P. is currently the largest shareholder, with 56% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. In comparison, the second and third largest shareholders hold about 4.9% and 4.8% of the stock. Furthermore, CEO David Peacock is the owner of 0.6% 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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Advantage Solutions

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Our most recent data indicates that insiders own some shares in Advantage Solutions Inc.. As individuals, the insiders collectively own US$19m worth of the US$911m company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 11% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Advantage Solutions. 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 a stake of 56%, private equity firms could influence the Advantage Solutions board. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should be aware of the 1 warning sign we've spotted with Advantage Solutions .

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.