Compass, Inc.’s (NYSE:COMP) latest 17% decline adds to one-year losses, institutional investors may consider drastic measures

If you want to know who really controls Compass, Inc. (NYSE:COMP), then you need to look at the composition of the stock register. And the group holding the biggest slice of the pie are institutions with 38% ownership. That is, the group will benefit most when the stock goes up (or lose most when it goes down).

It follows that institutional investors were the hardest-hit group after the company’s market cap fell 17% to $1.6 billion last week following a fall in its share price. The recent loss, which adds to a 56% one-year loss for shareholders, may not sit well with this group of investors. Institutions, also known as “smart money,” have a huge impact on how a stock’s price moves. Therefore, if the decline continues, institutional investors could be pressured to sell Compass, which could hurt individual investors.

Let’s dive deeper into each type of Compass owner, starting with the table below.

Check out our latest analysis for Compass

What does institutional ownership tell us about Compass?

Many institutions measure their performance against an index that approximates the local market. As a result, they tend to pay more attention to companies that are included in major indices.

Compass already has institutions in the share register. In fact, they own a respectable stake in the company. This may indicate that the company has a certain level of credibility in the investor community. However, it’s best not to rely on the supposed confirmation that comes from institutional investors. They too are sometimes wrong. If several institutes change their opinion on a stock at the same time, the share price could fall quickly. It is therefore worth checking out Compass’s winning history below. Of course, what really matters is the future.

Hedge funds don’t have many stakes in Compass. SoftBank Investment Advisers (UK) Limited is currently the company’s largest shareholder with 30% of the outstanding shares. The Vanguard Group, Inc. is the second largest shareholder with 8.8% of the common stock, and Robert Reffkin owns about 6.2% of the company’s stock. Robert Reffkin, the third largest shareholder, also holds the title of CEO.

To make our study more interesting, we found that the four largest shareholders control more than half of the company, which means that this group has a significant influence on the company’s decision-making.

While examining a company’s institutional ownership can add value to your research, it’s also a good practice to research analyst recommendations to gain a deeper understanding of a stock’s expected performance. There are many analysts covering the stock, so it might be worth seeing what they’re forecasting as well.

Insider property of Compass

The definition of an insider may differ slightly from country to country, but board members always count. Management ultimately reports to the board of directors. However, it is not uncommon for managers to be board members, especially if they are founders or CEOs.

In general, I think insider ownership is a good thing. In some cases, however, it becomes more difficult for other shareholders to hold the board accountable for decisions.

Shareholders would likely be interested to know that insiders own Compass, Inc. stock. It’s a fairly large company, so seeing a potentially meaningful direction is generally positive. In this case, they own around $108 million worth of stock (at current prices). Most would say that this shows an alignment of interests between shareholders and the board. Still, it might be worth checking to see if these insiders have sold.

General Public Property

With a 25% stake, the general public, consisting mostly of individual investors, has some influence on Compass. While this ownership may not be sufficient to sway a policy decision in their favor, they can still collectively influence company policy.

Private Equity Ownership

With a 30% stake, private equity firms could influence the Compass board. Sometimes we see private equity stick around for the long term, but generally they have a shorter investment horizon and – as the name suggests – don’t invest much in publicly traded companies. After some time, they might try to sell capital and reallocate it elsewhere.

Next Steps:

It’s always worth thinking about the different groups that own shares in a company. But to better understand Compass, we need to consider many other factors. Think of risks, for example. Every company has them and we discovered them 3 compass warning signs you should know.

If you’re like me, you might want to think about whether this company is going to grow or shrink. Luckily, you can check out this free report that includes analyst forecasts for the future.

Note: The figures in this article are calculated using data for the last twelve months, relating to the 12-month period ending on the last date of the month to which the financial statements are dated. This may not tally with the annual report figures for the full year.

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This Simply Wall St article is of a general nature. We provide comments based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock and does not take into account your goals or financial situation. Our goal is to offer you long-term focused analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.