While hedge funds own 25% of Coveo Solutions Inc. (TSE:CVO), private equity firms are its largest shareholders with 25% ownership
Simply Wall St
5 min read
Key Insights
The considerable ownership by private equity firms in Coveo Solutions indicates that they collectively have a greater say in management and business strategy
A look at the shareholders of Coveo Solutions Inc. (TSE:CVO) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are private equity firms with 25% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
Meanwhile, hedge funds make up 25% of the company’s shareholders.
In the chart below, we zoom in on the different ownership groups of Coveo Solutions.
What Does The Institutional Ownership Tell Us About Coveo Solutions?
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 Coveo Solutions. 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 Coveo Solutions, (below). Of course, keep in mind that there are other factors to consider, too.
TSX:CVO Earnings and Revenue Growth September 17th 2023
It looks like hedge funds own 25% of Coveo Solutions shares. 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. Looking at our data, we can see that the largest shareholder is Elliott Management Corporation with 25% of shares outstanding. For context, the second largest shareholder holds about 13% of the shares outstanding, followed by an ownership of 12% by the third-largest shareholder. Furthermore, CEO Louis Tetu is the owner of 3.5% of the company's shares.
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 it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of Coveo Solutions
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.
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 Coveo Solutions Inc.. As individuals, the insiders collectively own CA$47m worth of the CA$1.1b company. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.
General Public Ownership
With a 20% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Coveo Solutions. 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 25%, 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.
Private Company Ownership
We can see that Private Companies own 9.6%, of the shares on issue. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.
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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Coveo Solutions , 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.
