A look at the shareholders of Torrid Holdings Inc. (NYSE:CURV) can tell us which group is most powerful. The group holding the most number of shares in the company, around 55% to be precise, is private equity firms. Put another way, the group faces the maximum upside potential (or downside risk).
Meanwhile, individual investors make up 17% of the company’s shareholders.
Let’s delve deeper into each type of owner of Torrid Holdings, beginning with the chart below.
What Does The Institutional Ownership Tell Us About Torrid Holdings?
Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.
We can see that Torrid Holdings does have institutional investors; and they hold a good portion of the company’s stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. When multiple institutions own a stock, there’s always a risk that they are in a ‘crowded trade’. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Torrid Holdings’ historic earnings and revenue below, but keep in mind there’s always more to the story.
It would appear that 9.9% of Torrid Holdings shares are controlled by hedge funds. That’s interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. Looking at our data, we can see that the largest shareholder is Sycamore Partners Management, L.P. with 55% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. Meanwhile, the second and third largest shareholders, hold 9.9% and 4.8%, of the shares outstanding, respectively. Lisa Harper, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.
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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
Insider Ownership Of Torrid Holdings
The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.
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.
We can report that insiders do own shares in Torrid Holdings Inc.. It has a market capitalization of just US$305m, and insiders have US$28m worth of shares, in their own names. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.
General Public Ownership
The general public– including retail investors — own 17% stake in the company, and hence can’t easily be ignored. While this group can’t necessarily call the shots, it can certainly have a real influence on how the company is run.
Private Equity Ownership
Private equity firms hold a 55% stake in Torrid Holdings. This suggests they can be influential in key policy decisions. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and — as the name suggests — don’t invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.
Next Steps:
It’s always worth thinking about the different groups who own shares in a company. But to understand Torrid Holdings better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We’ve identified 4 warning signs with Torrid Holdings (at least 2 which can’t be ignored) , and understanding them should be part of your investment process.
Ultimately the future is most important. You can access this free report on analyst forecasts for the company.