Could the ownership structure of Coveo Solutions Inc. (TSE: CVO) tell us anything useful?

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If you want to know who actually controls Coveo Solutions Inc. (TSE:CVO), then you’ll need to look at the composition of its share register. Generally speaking, as a company grows, institutions increase their ownership. Conversely, insiders often decrease their ownership over time. Companies that have been privatized tend to have low insider ownership.

Coveo Solutions is not a large company by global standards. It has a market cap of C$899 million, which means it wouldn’t get the attention of many institutional investors. Our analysis of company ownership, below, shows that institutional investors have bought the company. Let’s dig deeper into each owner type to learn more about Coveo Solutions.

Check out our latest analysis for Coveo Solutions

TSX:CVO Ownership Allocation April 18, 2022

What does institutional ownership tell us about Coveo solutions?

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.

Coveo Solutions already has institutions on the share register. Indeed, they hold a respectable stake in the company. This implies that analysts working for these institutions have reviewed the stock and like it. But like everyone else, they can be wrong. If multiple institutions change their minds on a stock at the same time, you could see the stock price drop quickly. So it’s worth checking out Coveo Solutions’ earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
TSX: CVO Earnings and Revenue Growth April 18, 2022

It would appear that 25% of the shares of Coveo Solutions are controlled by hedge funds. This is interesting because hedge funds can be very active and militant. Many are looking for medium-term catalysts that will drive the stock price higher. Our data shows that Elliott Management Corporation is the largest shareholder with 25% of shares outstanding. Meanwhile, the second and third largest shareholders hold 14% and 12% of the outstanding shares respectively. Additionally, we found that Louis Tetu, the CEO, owns 3.4% of the shares allocated in his name.

A more detailed study of the shareholder register showed us that 3 of the main shareholders hold a considerable stake in the company, via their 51% stake.

While it makes sense to study data on a company’s institutional ownership, it also makes sense to study analyst sentiment to find out which way the wind is blowing. A number of analysts cover the stock, so you can look at growth forecasts quite easily.

Insider Ownership of Coveo Solutions

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The management of the company answers to the board of directors and the latter must represent the interests of the shareholders. In particular, sometimes the senior executives themselves sit on the board of directors.

Most view insider ownership as a positive because it can indicate that the board is well aligned with other shareholders. However, there are times when too much power is concentrated within this group.

Our most recent data shows that insiders own shares of Coveo Solutions Inc. Its market capitalization is just C$899 million, and insiders own shares worth C$35 million, in their own name. It’s good to see insider investing, but it might be worth checking to see if those insiders have been buying.

General public property

The general public, including retail investors, owns 24% of the company’s shares and therefore cannot be easily ignored. This size of ownership, although considerable, may not be sufficient to change company policy if the decision is not in line with other major shareholders.

Private equity ownership

The private equity firms hold a 26% stake in Coveo Solutions. This suggests that they can influence key policy decisions. Some investors might be encouraged by this, as private equity is sometimes able to encourage strategies that help the market see the value of the company. Alternatively, these holders could exit the investment after making it public.

Private Company Ownership

It appears that private companies own 10% of the shares of Coveo Solutions. It might be worth exploring this further. If related parties, such as insiders, have an interest in any of these private companies, this 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 see who exactly owns a business. But to really get insight, we also need to consider other information. Be aware that Coveo Solutions displays 2 warning signs in our investment analysis and 1 of them does not suit us too much…

If you prefer to find out what analysts are predicting in terms of future growth, don’t miss this free analyst forecast report.

NB: The figures in this article are calculated using trailing twelve month data, which refers to the 12 month period ending on the last day of the month in which the financial statements are dated. This may not be consistent with the annual report figures for the full year.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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