Private equity firms own 23% of ESS Tech, Inc. (NYSE:GWH) shares but public companies control 34% of the company
Key Insights
The considerable ownership by public companies in ESS Tech indicates that they collectively have a greater say in management and business strategy
A total of 4 investors have a majority stake in the company with 52% ownership
To get a sense of who is truly in control of ESS Tech, Inc. (NYSE:GWH), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are public companies with 34% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
Private equity firms, on the other hand, account for 23% of the company's stockholders.
Let's delve deeper into each type of owner of ESS Tech, beginning with the chart below.
Check out our latest analysis for ESS Tech
What Does The Institutional Ownership Tell Us About ESS Tech?
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 ESS Tech does have institutional investors; and they hold a good portion of the company's stock. 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 ESS Tech's historic earnings and revenue below, but keep in mind there's always more to the story.
Hedge funds don't have many shares in ESS Tech. SoftBank Group Corp. is currently the company's largest shareholder with 21% of shares outstanding. With 14% and 11% of the shares outstanding respectively, Honeywell International Inc. and Breakthrough Energy LLC are the second and third largest shareholders. Furthermore, CEO Eric Dresselhuys is the owner of 1.2% of the company's shares.
Our research also brought to light the fact that roughly 52% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.
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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of ESS Tech
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. 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.
Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.
We can see that insiders own shares in ESS Tech, Inc.. In their own names, insiders own US$14m worth of stock in the US$202m company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.
General Public Ownership
With a 15% ownership, the general public, mostly comprising of individual investors, have some degree of sway over ESS Tech. 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 Ownership
Private equity firms hold a 23% stake in ESS Tech. This suggests they can be influential in key policy decisions. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.
Public Company Ownership
We can see that public companies hold 34% of the ESS Tech shares on issue. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand ESS Tech better, we need to consider many other factors. For example, we've discovered 3 warning signs for ESS Tech that you should be aware of before investing here.
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.
