GrowGeneration Corp.'s (NASDAQ:GRWG) market cap dropped US$23m last week; individual investors who hold 51% were hit as were institutions

Key Insights

• The considerable ownership by retail investors in GrowGeneration indicates that they collectively have a greater say in management and business strategy
• A total of 25 investors have a majority stake in the company with 42% ownership
• Institutions own 44% of GrowGeneration

Every investor in GrowGeneration Corp. (NASDAQ:GRWG) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are retail investors with 51% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Following a 14% decrease in the stock price last week, retail investors suffered the most losses, but institutions who own 44% stock also took a hit.

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

Check out our latest analysis for GrowGeneration

What Does The Institutional Ownership Tell Us About GrowGeneration?

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 GrowGeneration does have institutional investors; and they hold a good portion of the company's stock. 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. 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 GrowGeneration, (below). Of course, keep in mind that there are other factors to consider, too.

GrowGeneration is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is BlackRock, Inc. with 7.1% of shares outstanding. For context, the second largest shareholder holds about 6.7% of the shares outstanding, followed by an ownership of 4.7% by the third-largest shareholder. In addition, we found that Darren Lampert, the CEO has 1.3% of the shares allocated to their name.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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. 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 GrowGeneration

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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 GrowGeneration Corp.. As individuals, the insiders collectively own US$7.0m worth of the US$145m company. This shows at least some alignment, but we usually like to see larger insider holdings. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 51% of GrowGeneration shares. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

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. Take risks for example - GrowGeneration has 2 warning signs we think 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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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.