Workshop course

With a 53% stake in Build-A-Bear Workshop, Inc. (NYSE: BBW), institutional investors have a lot to do with the company

To get a sense of who really controls Build-A-Bear Workshop, Inc. (NYSE: BBW), it’s important to understand the company’s ownership structure. We can see that institutions hold the lion’s share of the business with 53% ownership. That is, the group will benefit the most if the stock goes up (or lose the most if there is a downturn).

And last week, institutional investors ended up benefiting the most after the company hit $300 million in market capitalization. Last week’s gains would have further boosted one-year shareholder returns, which currently stand at 39%.

Let’s take a closer look to see what different types of shareholders can tell us about Build-A-Bear Workshop.

Check out our latest analysis for Build-A-Bear Workshop

NYSE: BBW ownership breakdown as of May 31, 2022

What does institutional ownership tell us about the Build-A-Bear workshop?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it is included in a major index. We would expect most companies to have some institutions listed, especially if they are growing.

As you can see, institutional investors have a sizeable share in Build-A-Bear Workshop. This suggests some credibility with professional investors. But we cannot rely solely on this fact since institutions sometimes make bad investments, like everyone else. It is not uncommon to see a sharp decline in the stock price if two large institutional investors attempt to sell a stock at the same time. So it’s worth checking out Build-A-Bear Workshop’s past revenue trajectory (below). Of course, keep in mind that there are other factors to consider as well.

earnings-and-revenue-growth
NYSE: BBW Earnings and Revenue Growth as of May 31, 2022

Investors should note that institutions actually own more than half of the company, so they can collectively wield significant power. Reportedly, 18% of Build-A-Bear Workshop’s stock is controlled by hedge funds. This is worth noting, as hedge funds are often quite active investors, who may try to influence management. Many want value creation (and a rise in share price) in the short to medium term. Our data shows that Cannell Capital LLC is the largest shareholder with 11% of shares outstanding. Meanwhile, the second and third largest shareholders hold 6.7% and 6.6% of the outstanding shares respectively. Additionally, CEO Sharon John owns 3.7% of the company’s shares.

A closer look at our ownership figures suggests that the top 12 shareholders hold a combined ownership of 52%, implying that no single shareholder has a majority.

While it makes sense to study data on a company’s institutional ownership, it also makes sense to study analyst sentiment to find out which way the wind is blowing. Although there is some analyst coverage, the company is probably not widely covered. So it could attract more attention, on the track.

Build-A-Bear Workshop Insider Ownership

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The management of the company answers to the board of directors and the latter must represent the interests of the shareholders. In particular, sometimes the senior executives themselves sit on the board of directors.

Insider ownership is positive when it signals that executives think like the true owners of the company. However, strong insider ownership can also give immense power to a small group within the company. This can be negative in certain circumstances.

Our information suggests that insiders hold a significant stake in Build-A-Bear Workshop, Inc. It has a market capitalization of just $300 million, and insiders own $44 million of stock in their own name. It’s great to see insiders so invested in the company. It might be worth checking to see if these insiders have bought recently.

General public property

The general public, including retail investors, owns 15% of the company’s capital and therefore cannot be easily ignored. This size of ownership, although considerable, may not be sufficient to change company policy if the decision is not in line with other large shareholders.

Next steps:

I find it very interesting to see who exactly owns a business. But to really get insight, we also need to consider other information. To this end, you should be aware of the 1 warning sign we spotted with Build-A-Bear Workshop.

If you’re like me, you might want to ask yourself if this business will grow or shrink. Luckily, you can check out this free report showing analyst predictions for its future.

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

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and 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 financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.