Key Insights

• Significant control over Rackspace Technology by private equity firms implies that the general public has more power to influence management and governance-related decisions
• 57% of the company is held by a single shareholder (Apollo Global Management, Inc.)
• 22% of Rackspace Technology is held by Institutions

If you want to know who really controls Rackspace Technology, Inc. (NASDAQ:RXT), then you'll have to look at the makeup of its share registry. We can see that private equity firms own the lion's share in the company with 57% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While the holdings of private equity firms took a hit after last week's 12% price drop, institutions with their 22% holdings also suffered.

In the chart below, we zoom in on the different ownership groups of Rackspace Technology.

What Does The Institutional Ownership Tell Us About Rackspace Technology?

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

As you can see, institutional investors have a fair amount of stake in Rackspace Technology. 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. 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 Rackspace Technology, (below). Of course, keep in mind that there are other factors to consider, too.

Rackspace Technology is not owned by hedge funds. Apollo Global Management, Inc. is currently the company's largest shareholder with 57% 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 6.0% and 4.3%, of the shares outstanding, respectively. Additionally, the company's CEO Amar Maletira directly holds 2.2% of the total shares outstanding.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Rackspace Technology

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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

We can report that insiders do own shares in Rackspace Technology, Inc.. In their own names, insiders own US$54m worth of stock in the US$551m company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 11% stake in Rackspace Technology. 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 57%, private equity firms could influence the Rackspace Technology 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we've identified 3 warning signs for Rackspace Technology (1 is concerning) that you should be aware of.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.