Yahoo Finance Better Home & Finance Holding Company's (NASDAQ:BETR) stock price dropped 95% last week; retail investors would not be happy
Key Insights
The considerable ownership by retail investors in Better Home & Finance Holding indicates that they collectively have a greater say in management and business strategy
40% of the business is held by the top 15 shareholders
If you want to know who really controls Better Home & Finance Holding Company (NASDAQ:BETR), 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 retail investors with 60% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
While insiders, who own 21% shares weren’t spared from last week’s US$13b market cap drop, retail investors as a group suffered the maximum losses
Let's take a closer look to see what the different types of shareholders can tell us about Better Home & Finance Holding.
See our latest analysis for Better Home & Finance Holding
What Does The Lack Of Institutional Ownership Tell Us About Better Home & Finance Holding?
Small companies that are not very actively traded often lack institutional investors, but it's less common to see large companies without them.
There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. On the other hand, it's always possible that professional investors are avoiding a company because they don't think it's the best place for their money. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of Better Home & Finance Holding, for yourself, below.
Better Home & Finance Holding is not owned by hedge funds. With a 9.5% stake, CEO Vishal Garg is the largest shareholder. For context, the second largest shareholder holds about 7.6% of the shares outstanding, followed by an ownership of 6.6% by the third-largest shareholder. Interestingly, the third-largest shareholder, Riaz Valani is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.
On studying our ownership data, we found that 15 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.
While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.
Insider Ownership Of Better Home & Finance Holding
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.
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.
It seems insiders own a significant proportion of Better Home & Finance Holding Company. Insiders have a US$146m stake in this US$698m 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.
General Public Ownership
The general public -- including retail investors -- own 60% of Better Home & Finance Holding. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.
Private Equity Ownership
With an ownership of 14%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. 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.
Private Company Ownership
We can see that Private Companies own 5.7%, of the shares on issue. 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.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Better Home & Finance Holding better, we need to consider many other factors. Case in point: We've spotted 4 warning signs for Better Home & Finance Holding you should be aware of, and 3 of them make us uncomfortable.
Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.
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.
