P3 Health Partners Inc.’s (NASDAQ:PIII) market cap dropped US$9.5m last week; Private equity firms bore the brunt
Key Insights
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Significant control over P3 Health Partners by private equity firms implies that the general public has more power to influence management and governance-related decisions
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A total of 3 investors have a majority stake in the company with 55% ownership
Every investor in P3 Health Partners Inc. (NASDAQ:PIII) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are private equity firms with 45% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
And last week, private equity firms endured the biggest losses as the stock fell by 11%.
In the chart below, we zoom in on the different ownership groups of P3 Health Partners.
See our latest analysis for P3 Health Partners
What Does The Institutional Ownership Tell Us About P3 Health Partners?
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.
P3 Health Partners already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 P3 Health Partners, (below). Of course, keep in mind that there are other factors to consider, too.
Our data indicates that hedge funds own 9.9% of P3 Health Partners. That’s interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. Chicago Pacific Founders is currently the largest shareholder, with 40% of shares outstanding. With 9.9% and 5.5% of the shares outstanding respectively, Alyeska Investment Group, L.P. and Leavitt Equity Partners are the second and third largest shareholders.
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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of P3 Health Partners
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 most recent data indicates that insiders own some shares in P3 Health Partners Inc.. In their own names, insiders own US$5.7m worth of stock in the US$178m company. This shows at least some alignment, but we usually like to see larger insider holdings. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public– including retail investors — own 28% stake in the company, and hence can’t easily be ignored. While this group can’t necessarily call the shots, it can certainly have a real influence on how the company is run.
Private Equity Ownership
With a stake of 45%, private equity firms could influence the P3 Health Partners board. 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.
Next Steps:
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. Consider for instance, the ever-present spectre of investment risk. We’ve identified 3 warning signs with P3 Health Partners , and understanding them should be part of your investment process.
Ultimately the future is most important. You can access this free report on analyst forecasts for the company.
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.
