Both private equity firms who control a good portion of Flywire Corporation (NASDAQ:FLYW) along with institutions must be dismayed after last week's 13% decrease

By
Simply Wall St
Published
January 19, 2022
NasdaqGS:FLYW
Source: Shutterstock

A look at the shareholders of Flywire Corporation (NASDAQ:FLYW) can tell us which group is most powerful. We can see that private equity firms own the lion's share in the company with 47% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 13% decrease in the stock price last week, private equity firms suffered the most losses, but institutions who own 30% stock also took a hit.

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

See our latest analysis for Flywire

ownership-breakdown
NasdaqGS:FLYW Ownership Breakdown January 19th 2022

What Does The Institutional Ownership Tell Us About Flywire?

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.

Flywire already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Flywire's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
NasdaqGS:FLYW Earnings and Revenue Growth January 19th 2022

We note that hedge funds don't have a meaningful investment in Flywire. Bain Capital, LP is currently the largest shareholder, with 16% of shares outstanding. With 12% and 12% of the shares outstanding respectively, Spark Capital Partners, LLC and Temasek Holdings (Private) Limited are the second and third largest shareholders. Furthermore, CEO Michael Massaro is the owner of 1.3% of the company's shares.

On looking further, we found that 54% of the shares are owned by the top 5 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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 Flywire

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. 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 Flywire Corporation. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around US$75m worth of shares (at current prices). If you would like to explore the question of insider alignment, you can click here to see if insiders have been buying or selling.

General Public Ownership

With a 20% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Flywire. 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 47% stake in Flywire. This suggests they can be influential in key policy decisions. 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. Case in point: We've spotted 1 warning sign for Flywire you should be aware of.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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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