Significant control over Sonida Senior Living by private equity firms implies that the general public has more power to influence management and governance-related decisions
If you want to know who really controls Sonida Senior Living, Inc. (NYSE:SNDA), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 51% to be precise, is private equity firms. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
And institutions on the other hand have a 19% ownership in the company. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders.
In the chart below, we zoom in on the different ownership groups of Sonida Senior Living.
What Does The Institutional Ownership Tell Us About Sonida Senior Living?
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 Sonida Senior Living 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 Sonida Senior Living, (below). Of course, keep in mind that there are other factors to consider, too.
earnings-and-revenue-growth
Our data indicates that hedge funds own 14% of Sonida Senior Living. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. The company's largest shareholder is Conversant Capital LLC, with ownership of 51%. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. With 14% and 3.8% of the shares outstanding respectively, Siget, L.L.C. and Ortelius Capital Partners, LLC are the second and third largest shareholders. Furthermore, CEO Brandon Ribar is the owner of 1.7% 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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.
Insider Ownership Of Sonida Senior Living
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
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.
The general public, who are usually individual investors, hold a 10% stake in Sonida Senior Living. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Private Equity Ownership
With an ownership of 51%, 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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Sonida Senior Living , and understanding them should be part of your investment process.
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.
