Given the large stake in the stock by institutions, Eos Energy Enterprises' stock price might be vulnerable to their trading decisions
The top 25 shareholders own 47% of the company
Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company
To get a sense of who is truly in control of Eos Energy Enterprises, Inc. (NASDAQ:EOSE), it is important to understand the ownership structure of the business. We can see that institutions own the lion's share in the company with 48% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
After a year of 71% losses, last week’s 48% gain would be welcomed by institutional investors as a possible sign that returns might start trending higher.
Let's take a closer look to see what the different types of shareholders can tell us about Eos Energy Enterprises.
What Does The Institutional Ownership Tell Us About Eos Energy Enterprises?
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 Eos Energy Enterprises. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Eos Energy Enterprises' historic earnings and revenue below, but keep in mind there's always more to the story.
earnings-and-revenue-growth
We note that hedge funds don't have a meaningful investment in Eos Energy Enterprises. Looking at our data, we can see that the largest shareholder is BlackRock, Inc. with 5.1% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 4.7% and 4.5%, of the shares outstanding, respectively. In addition, we found that Joseph Mastrangelo, the CEO has 0.9% of the shares allocated to their name.
A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.
Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
Insider Ownership Of Eos Energy Enterprises
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.
We can report that insiders do own shares in Eos Energy Enterprises, Inc.. As individuals, the insiders collectively own US$4.6m worth of the US$275m company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public-- including retail investors -- own 46% stake in the company, and hence can't easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 4 warning signs for Eos Energy Enterprises (3 make us uncomfortable!) that you should be aware of before investing here.
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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