ATRenew's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
55% of the business is held by the top 4 shareholders
Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock
Every investor in ATRenew Inc. (NYSE:RERE) should be aware of the most powerful shareholder groups. With 38% stake, individual investors possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
And public companies on the other hand have a 34% ownership in the company.
In the chart below, we zoom in on the different ownership groups of ATRenew.
What Does The Institutional Ownership Tell Us About ATRenew?
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 ATRenew. 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 ATRenew's historic earnings and revenue below, but keep in mind there's always more to the story.
NYSE:RERE Earnings and Revenue Growth August 2nd 2024
Our data indicates that hedge funds own 5.2% of ATRenew. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. Our data shows that JD.com, Inc. is the largest shareholder with 34% of shares outstanding. In comparison, the second and third largest shareholders hold about 8.0% and 7.7% of the stock. Xuefeng Chen, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board.
To make our study more interesting, we found that the top 4 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.
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 is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.
Insider Ownership Of ATRenew
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.
Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.
We can report that insiders do own shares in ATRenew Inc.. It has a market capitalization of just US$588m, and insiders have US$45m worth of shares, in their own names. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.
General Public Ownership
With a 38% ownership, the general public, mostly comprising of individual investors, have some degree of sway over ATRenew. 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 8.0%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. 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.
Public Company Ownership
We can see that public companies hold 34% of the ATRenew shares on issue. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand ATRenew better, we need to consider many other factors. Be aware that ATRenew is showing 2 warning signs in our investment analysis, you should know about...
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.
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