The considerable ownership by private equity firms in Sigma Lithium indicates that they collectively have a greater say in management and business strategy
If you want to know who really controls Sigma Lithium Corporation (NASDAQ:SGML), 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 43% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
While institutions, who own 38% shares weren’t spared from last week’s US$145m market cap drop, private equity firms as a group suffered the maximum losses
Let's delve deeper into each type of owner of Sigma Lithium, beginning with the chart below.
NasdaqCM:SGML Ownership Breakdown December 19th 2024
What Does The Institutional Ownership Tell Us About Sigma Lithium?
Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.
We can see that Sigma Lithium 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. 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 Sigma Lithium's historic earnings and revenue below, but keep in mind there's always more to the story.
NasdaqCM:SGML Earnings and Revenue Growth December 19th 2024
Hedge funds don't have many shares in Sigma Lithium. Our data shows that A10 Investimentos Ltda. is the largest shareholder with 43% of shares outstanding. Fitpart Fund Administration Services Limited is the second largest shareholder owning 4.9% of common stock, and BlackRock, Inc. holds about 4.8% of the company stock.
After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.
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 Sigma Lithium
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.
Shareholders would probably be interested to learn that insiders own shares in Sigma Lithium Corporation. This is a big company, so it is good to see this level of alignment. Insiders own US$33m 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
The general public-- including retail investors -- own 13% stake in the company, and hence can't easily be ignored. 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 43% stake in Sigma Lithium. This suggests they can be influential in key policy decisions. 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.
Private Company Ownership
We can see that Private Companies own 3.2%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.
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.
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.
