Institutional owners could take dramatic action as The Honest Company, Inc.’s (NASDAQ:HNST) recent 10% drop adds to the year’s losses.

Understanding the ownership structure of the business is key to understanding the true controllers of The Honest Company, Inc. (NASDAQ:HNST). We can see that the institution owns most of the company with his 34% ownership. In other words, the group stands to gain the most if the share price rises (or suffer the most loss if it falls).

Institutional investors were therefore the group most affected after the company’s market capitalization fell to $250 million last week, after the stock price fell 10%. The recent loss adds to his one-year loss of 66% for shareholders and may be unacceptable for this group of investors. Because institutions or “liquidity providers” manage large sums of money, these types of investors typically have significant influence over stock price movements. As a result, if the decline continues, institutional investors could be forced to sell their honest companies, hurting retail investors.

The chart below expands on the various ownership groups of the Honest Company.

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What does institutional ownership tell us about honest companies?

Institutional investors typically compare their returns to those of commonly followed indices. As such, they typically look to acquire large companies included in the relevant benchmark index.

An honest company already has a body in the stock register. In fact, they own a sizeable stake in the company. This may indicate that the company has some credibility in the investment community. However, caution should be exercised in relying on the validation that institutional investors assume. They get it wrong sometimes too. When two large institutional investors try to sell their shares at the same time, it’s not uncommon for the stock price to drop significantly. Therefore, it’s worth taking a look at Honest Company’s historical earnings trajectory (below). Of course, keep in mind that there are other factors to consider as well.

Hedge funds don’t have much equity in honest companies. L Catterton Partners is now the largest shareholder with his 13% of outstanding shares. Institutional Venture Partners is the second largest shareholder with 11% of the common stock and Jessica Warren owns approximately 5.2% of the company’s shares. The third largest shareholder, Jessica Warren, also happens to have the title of member of the board.

Further investigation revealed that the top 11 companies have 50% total ownership of the company. This suggests that no single shareholder has significant control over the company.

Studying institutional ownership of companies can add value to your research, but it’s also good practice to research analyst recommendations to gain a better understanding of the stock’s expected performance. is. Quite a few analysts cover stocks, so it’s very easy to look up forecast growth.

Honest Company Insider Ownership

While the precise definition of an insider can be subjective, we believe that most directors are insiders. The company’s management runs the business, but the CEO answers the board even though he is a member of the board.

I usually think insider ownership is a good thing. However, in some cases, it becomes more difficult for other shareholders to hold the board accountable for decision making.

Insiders appear to own a majority of The Honest Company, Inc. The insider owns his $33 million worth of stock in the $250 million company. It’s great to see an insider investing in a business. It might be worth checking to see if those insiders have made any recent purchases.

general public

The general public, usually private investors, own 28% of the Honest Company. Ownership of this magnitude is substantial, but may not be sufficient to change company policy if decisions are out of sync with other major shareholders.

Private equity ownership

With 24% ownership, the private equity firm is well positioned to play a role in shaping corporate strategy focused on value creation. Some may like this because private equity can be an activist to hold management accountable. But sometimes private equity is sold and the company goes public.

Next steps:

I think it will be very interesting to see who exactly owns the company. But for true insight, other information must also be considered. for example, 3 Warning Signs of an Honest Company What you should know.

Don’t miss this if you want to know what analysts are predicting when it comes to future growth freedom Reports on analyst forecasts.

Note: The numbers in this article are calculated using the last 12 months of data. This refers to his 12-month period ending on the last day of the month in which the financial statements are dated. This may not match the annual report figures for the full year.

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This article by Simply Wall St is general in nature. We provide comments based on historical data and analyst projections using only unbiased methodologies and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. We aim to deliver long-term focused analysis based on fundamental data. Please note that our analysis may not take into account the latest price sensitive company announcements or qualitative materials. Is not …