Key Insights

• Significant control over Redwire by private equity firms implies that the general public has more power to influence management and governance-related decisions
• The largest shareholder of the company is AE Industrial Partners, LP with a 54% stake
• Institutional ownership in Redwire is 13%

To get a sense of who is truly in control of Redwire Corporation (NYSE:RDW), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are private equity firms with 61% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Clearly, private equity firms benefitted the most after the company's market cap rose by US$57m last week.

Let's delve deeper into each type of owner of Redwire, beginning with the chart below.

What Does The Institutional Ownership Tell Us About Redwire?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

We can see that Redwire 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Redwire's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Redwire. The company's largest shareholder is AE Industrial Partners, LP, with ownership of 54%. This implies that they have majority interest control of the future of the company. Genesis Park Management LLC is the second largest shareholder owning 7.1% of common stock, and BlackRock, Inc. holds about 2.2% of the company stock.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Redwire

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Shareholders would probably be interested to learn that insiders own shares in Redwire Corporation. As individuals, the insiders collectively own US$13m worth of the US$460m company. 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 23% stake in the company, and hence can't easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Equity Ownership

With a stake of 61%, private equity firms could influence the Redwire board. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Redwire better, we need to consider many other factors. For example, we've discovered 2 warning signs for Redwire that you should be aware of before investing here.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.

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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 to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.