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Tue. Jul 16th, 2024

Institutional investors may take serious action after The Boston Beer Company, Inc. (NYSE:SAM) shares fell 3.9%, extending its year-to-date losses

By meerna Jul11,2024

Key observations

If you want to know who really controls The Boston Beer Company, Inc. (NYSE:SAM), you have to look at the composition of the share registry. We can see that institutions own the lion’s share of the company, with a 62% stake. In other words, the group is facing maximum upside potential (or downside risk).

So it follows that institutional investors were the group most affected after the company’s market capitalization fell to $3.4 billion last week following a 3.9% drop in the share price. The latest loss, which adds to the shareholders’ annual loss of 5.7%, may not go over well with this group of investors. Institutions, or “liquidity providers,” control large sums of money, and as such, these types of investors typically have a big influence on the stock’s price movements. As a result, if the downtrend continues, institutions could face selling pressure on Boston Beer Company, which could have negative consequences for individual investors.

In the chart below we look at the different ownership groups of Boston Beer Company.

See our latest analysis for Boston Beer Company

NYSE: SAM Ownership Split July 11, 2024

What does the ownership structure tell us about Boston Beer Company?

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

As you can see, institutional investors have a lot of shares in Boston Beer Company. This means that the analysts working for these institutions have looked at the stock and they like it. But like anyone else, they can be wrong. If multiple institutions change their view on a stock at the same time, you could see the share price drop quickly. So it’s worth taking a look at Boston Beer Company’s earnings history below. Of course, the future is what really matters.

NYSE:SAM Earnings and Revenue Growth July 11, 2024

Investors should keep in mind that institutions actually own more than half of a company, so they can collectively wield significant power. Boston Beer Company is not owned by any hedge funds. Since actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In the case of Boston Beer Company, its CEO, C. Koch, is the largest shareholder, with 19% of the shares outstanding. In comparison, the second and third largest shareholders hold about 7.6% and 7.1% of the shares.

We did some more research and found that the top seven shareholders account for about 51% of the company’s shares, which means that alongside the larger shareholders, there are a number of smaller shareholders who balance their interests to some extent.

While researching institutional ownership of a company can add value to your research, it’s also a good idea to research analyst recommendations to better understand the stock’s expected performance. Quite a few analysts cover the stock, so you can look into its projected growth quite easily.

Boston Beer Company Internal Property

The definition of a company insider can be subjective and varies by jurisdiction. Our data reflects individual insiders, including at least board members. Company management runs the business, but the CEO will report to the board, even if he or she is a board member.

I generally think that having insiders is a good thing. However, in some cases it makes it harder for other shareholders to hold management accountable for decisions.

Our information suggests that insiders maintain a significant stake in The Boston Beer Company, Inc. Insiders own $797 million worth of shares in the $3.4 billion company. That’s quite significant. Most would say that this shows a good degree of alignment with shareholders, especially for a company of this size. You can click here to see if insiders have been buying or selling.

Public property

The general public—including retail investors—holds 15% of the company, so they can’t be easily ignored. This amount of ownership, while significant, may not be enough to change company policy if the decision is not in line with other large shareholders.

Next steps:

While it is worth considering the different groups that own a company, there are other factors that are even more important.

I like to dive deeper how the company has performed in the past. You can access this interactive chart about your current earnings, revenues and cash flow, free of charge.

But in the end this is the futurenot the past, which will determine how well the owners of this business will do. That’s why we think it’s worth taking a look at this free report, which shows whether analysts are predicting a brighter future.

NB: The figures in this article are calculated using the last twelve months of data, which refer to the 12-month period ending on the last day of the month in which the financial statements are prepared. This may not be consistent with the figures in the annual report for the full year.

Valuation is a complicated process, but we help simplify it.

Find out if Boston Beer Company is potentially overvalued or undervalued by reading our comprehensive analysis, which includes: fair value estimates, risks and warnings, dividends, internal transactions and financial condition.

See a free analysis

Have an opinion on this article? Concerned about the content? contact us with us directly. You can also email us at editorial-team (at) simplywallst.com.

This Simply Wall St article is for general information purposes only. Our commentary is based solely on historical data and analyst forecasts, and is based on an objective methodology. Our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or your financial situation. Our goal is to provide you with long-term, focused analysis based on fundamental data. Please note that our analysis may not reflect the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Valuation is a complicated process, but we help simplify it.

Find out if Boston Beer Company is potentially overvalued or undervalued by reading our comprehensive analysis, which includes: fair value estimates, risks and warnings, dividends, internal transactions and financial condition.

See a free analysis

Have feedback on this article? Concerned about the content? Contact us directly. Alternatively, send an email to [email protected]

By meerna

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