Global Water Resources, Inc.’s (NASDAQ:GWRS) market cap touched US$308m last week, benefiting both private companies who own 43% as well as institutions

If you want to know who really controls Global Water Resources, Inc. (NASDAQ:GWRS), then you’ll need to look at the composition of its share register. We see that private companies own the lion’s share of the company with 43% ownership. In other words, the group faces maximum growth potential (or downside risk).

Private companies gained the most after market capitalization hit $308 million last week, while institutions, which own 24%, also benefited.

In the chart below, we enlarge the display of the different ownership groups of Global Water Resources.

Check out our latest analysis for Global Water Resources

NasdaqGM: GWRS Ownership Analysis October 30, 2022

What does institutional ownership tell us about global water resources?

Institutional investors typically compare their own returns to the returns of a commonly tracked index. Therefore, they generally consider buying larger companies that are included in the relevant benchmark index.

As you can see, institutional investors have quite a stake in Global Water Resources. This may mean that the company has a certain degree of credibility in the investment community. However, it is best to be cautious about relying on the supposed confirmation that comes with institutional investors. And they sometimes make mistakes. When multiple institutions own stocks, there is always the risk that they are in a “crowded trade”. When such a trade goes wrong, multiple parties can compete to quickly sell the shares. This risk is greater in a company without a history of growth. Below you can see Global Water Resources’ historical earnings and revenue, but keep in mind there’s always more to the story.

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growth of earnings and income
NasdaqGM: GWRS Earnings and Revenue Growth Oct 30, 2022

Our data shows that hedge funds own 5.5% of Global Water Resources. This catches my attention because hedge funds sometimes try to influence management or make changes that will create short-term shareholder value. Looking at our data, we can see that the largest shareholder is Levine Investments Limited Partnership with 43% of the shares. Andrew Cohn is the second largest shareholder owning 8.9% of the common shares, and Handelsbanken Asset Management holds about 6.1% of the company’s shares.

After digging a little deeper, we discovered that the top 2 shareholders collectively control more than half of the company’s stock, implying that they have considerable power to influence company decisions.

Researching institutional ownership is a good way to assess and filter the expected performance of a stock. The same can be achieved by studying the analyst’s feelings. While there is some analyst coverage, the company is probably not widely covered. That way he could attract more attention, down the track.

Insider ownership of global water resources

The definition of a company insider can be subjective and varies between jurisdictions. Our data reflects individual insiders, including at least board members. The company’s board runs the business, but the CEO will answer to the board, even if he or she is a board member.

Most view insider ownership as positive because it can mean that management is well aligned with other shareholders. However, in some cases too much power is concentrated within this group.

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Our information suggests that insiders retain a significant stake in Global Water Resources, Inc. The insiders own $46 million worth of stock in the $308 million company. It’s great to see insiders so invested in the business. It might be worth checking if these insiders have bought recently.

General public domain

With 13% ownership, the public, which consists mostly of individual investors, has some degree of influence over Global Water Resources. Although this size of ownership may not be enough to make a policy decision in their favor, they can still exert a collective influence on company policy.

Private property of the company

Private companies appear to own 43% of Global Water Resources shares. It might be worth looking into this more deeply. If related persons, such as insiders, have interests in one of these private companies, this should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next steps:

It’s always worth thinking about the different groups that own shares in a company. But to better understand global water resources, we need to consider many other factors. Consider, for example, the ever-present specter of investment risk. We have identified 4 warning signs with Global Water Resources (at least 3 that are a bit uncomfortable), and understanding them should be part of your investment process.

If you’re like me, you might want to think about whether this company is going to grow or shrink. Fortunately, you can check out this free report that shows analysts’ predictions for its future.

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NOTE: The figures in this article have been calculated using data from the last twelve months, which refer to the 12-month period ending on the last day of the month in which the financial statement is dated. This may not be consistent with the annual report figures for the full year.

Valuation is complex, but we help make it simple.

Find out if Global water resources is potentially overrated or underrated by checking our extensive analysis, which includes fair value estimates, risks and caveats, dividends, preferential transactions and financial health.

Check out the free analysis

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 as financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our goal is to provide you with long-term focused analysis driven by fundamental data. Please note that our analysis may not take into account the company’s latest price-sensitive announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.


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