What Type Of Shareholders Make Up Authentic Equity Acquisition Corp.'s (NASDAQ:AEAC) Share Registry?
Simply Wall St
4 min read
Every investor in Authentic Equity Acquisition Corp. (NASDAQ:AEAC) should be aware of the most powerful shareholder groups. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. Companies that have been privatized tend to have low insider ownership.
With a market capitalization of US$293m, Authentic Equity Acquisition is a small cap stock, so it might not be well known by many institutional investors. Our analysis of the ownership of the company, below, shows that institutions are noticeable on the share registry. We can zoom in on the different ownership groups, to learn more about Authentic Equity Acquisition.
NasdaqCM:AEAC Ownership Breakdown November 13th 2021
What Does The Institutional Ownership Tell Us About Authentic Equity Acquisition?
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.
As you can see, institutional investors have a fair amount of stake in Authentic Equity Acquisition. 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 Authentic Equity Acquisition, (below). Of course, keep in mind that there are other factors to consider, too.
NasdaqCM:AEAC Earnings and Revenue Growth November 13th 2021
Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Hedge funds don't have many shares in Authentic Equity Acquisition. Looking at our data, we can see that the largest shareholder is Authentic Equity Sponsor LLC with 23% of shares outstanding. In comparison, the second and third largest shareholders hold about 4.7% and 4.4% of the stock.
A closer look at our ownership figures suggests that the top 11 shareholders have a combined ownership of 52% implying that no single shareholder has a majority.
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. As far I can tell there isn't analyst coverage of the company, so it is probably flying under the radar.
Insider Ownership Of Authentic Equity Acquisition
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.
Our data suggests that insiders own under 1% of Authentic Equity Acquisition Corp. in their own names. But they may have an indirect interest through a corporate structure that we haven't picked up on. It seems the board members have no more than US$732k worth of shares in the US$293m company. I generally like to see a board more invested. However it might be worth checking if those insiders have been buying.
General Public Ownership
The general public holds a 21% stake in Authentic Equity Acquisition. 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 Company Ownership
It seems that Private Companies own 23%, of the Authentic Equity Acquisition stock. 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:
It's always worth thinking about the different groups who own shares in a company. But to understand Authentic Equity Acquisition better, we need to consider many other factors. For instance, we've identified 3 warning signs for Authentic Equity Acquisition (2 can't be ignored) that you should be aware of.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this freelist of interesting companies.
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.
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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