Key Insights

• Institutions' substantial holdings in Boston Beer Company implies that they have significant influence over the company's share price
• 51% of the business is held by the top 6 shareholders
• Insiders own 24% of Boston Beer Company

To get a sense of who is truly in control of The Boston Beer Company, Inc. (NYSE:SAM), it is important to understand the ownership structure of the business. We can see that institutions own the lion's share in the company with 63% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Institutional investors would probably welcome last week's 5.5% increase in the share price after a year of 8.6% losses as a sign that returns may to begin trending higher.

In the chart below, we zoom in on the different ownership groups of Boston Beer Company.

What Does The Institutional Ownership Tell Us About Boston Beer Company?

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.

Boston Beer Company already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Boston Beer Company, (below). Of course, keep in mind that there are other factors to consider, too.

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Hedge funds don't have many shares in Boston Beer Company. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Boston Beer Company's case, its Top Key Executive, C. Koch, is the largest shareholder, holding 20% of shares outstanding. In comparison, the second and third largest shareholders hold about 7.9% and 7.2% of the stock.

We also observed that the top 6 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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 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 Boston Beer Company

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

It seems insiders own a significant proportion of The Boston Beer Company, Inc.. It is very interesting to see that insiders have a meaningful US$826m stake in this US$3.4b business. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

The general public, who are usually individual investors, hold a 13% stake in Boston Beer Company. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Boston Beer Company better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Boston Beer Company you should know about.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.