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Given the large stake in the stock by institutions, Accel Entertainment’s stock price might be vulnerable to their trading decisions
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50% of the business is held by the top 6 shareholders
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Insiders have sold recently
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If you want to know who really controls Accel Entertainment, Inc. (NYSE:ACEL), 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 institutions with 36% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
Since institutional have access to huge amounts of capital, their market moves tend to receive a lot of scrutiny by retail or individual investors. As a result, a sizeable amount of institutional money invested in a firm is generally viewed as a positive attribute.
Let’s take a closer look to see what the different types of shareholders can tell us about Accel Entertainment.
Check out our latest analysis for Accel Entertainment
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.
We can see that Accel Entertainment does have institutional investors; and they hold a good portion of the company’s stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Accel Entertainment, (below). Of course, keep in mind that there are other factors to consider, too.
Our data indicates that hedge funds own 16% of Accel Entertainment. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Clairvest Group Inc. is currently the company’s largest shareholder with 20% of shares outstanding. For context, the second largest shareholder holds about 9.6% of the shares outstanding, followed by an ownership of 6.6% by the third-largest shareholder. Additionally, the company’s CEO Andrew Rubenstein directly holds 4.8% of the total shares outstanding.
On further inspection, we found that more than half the company’s shares are owned by the top 6 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.
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 a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
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.
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.
Our information suggests that insiders maintain a significant holding in Accel Entertainment, Inc.. Insiders have a US$112m stake in this US$968m business. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.
With a 17% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Accel Entertainment. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.
Private equity firms hold a 20% stake in Accel Entertainment. This suggests they can be influential in key policy decisions. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.
While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we’ve identified 1 warning sign for Accel Entertainment that you should be aware of.
If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
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.