Significant control over Finance of America Companies by private equity firms implies that the general public has more power to influence management and governance-related decisions
54% of the business is held by the top 3 shareholders
To get a sense of who is truly in control of Finance of America Companies Inc. (NYSE:FOA), it is important to understand the ownership structure of the business. With 32% stake, private equity firms possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
As a result, private equity firms were the biggest beneficiaries of last week’s 10% gain.
In the chart below, we zoom in on the different ownership groups of Finance of America Companies.
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.
We can see that Finance of America Companies 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It’s therefore worth looking at Finance of America Companies’ earnings history below. Of course, the future is what really matters.
NYSE:FOA Earnings and Revenue Growth January 5th 2025
It looks like hedge funds own 11% of Finance of America Companies 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. Blackstone Inc. is currently the company’s largest shareholder with 32% of shares outstanding. For context, the second largest shareholder holds about 11% of the shares outstanding, followed by an ownership of 11% by the third-largest shareholder. Brian Libman, who is the second-largest shareholder, also happens to hold the title of Top Key Executive. Additionally, the company’s CEO Graham Fleming directly holds 1.3% of the total shares outstanding.
To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.
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 is some analyst coverage of the stock, but it could still become more well known, with time.
The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.
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 most recent data indicates that insiders own a reasonable proportion of Finance of America Companies Inc.. Insiders own US$105m worth of shares in the US$689m company. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.
The general public, who are usually individual investors, hold a 25% stake in Finance of America Companies. 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.
With an ownership of 32%, 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.
It seems that Private Companies own 6.7%, of the Finance of America Companies 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.
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. Like risks, for instance. Every company has them, and we’ve spotted 5 warning signs for Finance of America Companies (of which 3 can’t be ignored!) you should know about.
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.
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