Both public companies who control a good portion of SES AI Corporation (NYSE:SES) along with institutions must be dismayed after last week’s 12% decrease

Every investor in SES AI Corporation (NYSE:SES) should be aware of the most powerful shareholder groups. With 25% stake, public companies own the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Following a 12% decrease in the stock price last week, public companies suffered the most losses, but institutions that own 21% stock also took a hit.

In the chart below, we zoom in on the different ownership groups of SES AI.

Our analysis indicates that: SES is potentially overvalued!

NYSE:SES Ownership Breakdown November 23rd 2022

What Does The Institutional Ownership Tell Us About SES AI?

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.

As you can see, institutional investors have a fair amount of stake in SES AI. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too get it wrong sometimes. 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 SES AI’s earnings history below. Of course, the future is what really matters.

NYSE:SES Earnings and Revenue Growth November 23rd 2022

Hedge funds don’t have many shares in SES AI. With a 12% stake, CEO Qichao Hu is the largest shareholder. In comparison, the second and third largest shareholders hold about 11% and 9.4% of the stock.

We did some more digging and found that 6 of the top shareholders account for roughly 57% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each other’s interests somewhat.

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 understanding of a stock’s expected performance. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of SES AI

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our information suggests that insiders maintain a significant holding in SES AI Corporation. It is very interesting to see that insiders have a meaningful US$203m stake in this US$1.6b business. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership:

The general public — including retail investors — owns a 14% stake in the company, and hence can’t easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favor, they can still make a collective impact on company policies.

Private Equity Ownership:

With a stake of 18%, private equity firms could influence the SES AI board. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Private Company Ownership:

We can see that Private Companies own 9.1% of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it’s hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Public Company Ownership:

We can see that public companies hold 25% of the SES AI shares on issue. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

It’s always worth thinking about the different groups who own shares in a company. But to understand SES AI better, we need to consider many other factors. Case in point. We’ve spotted 4 warning signs for SES AI you should be aware of, and 2 of them are potentially serious.

If you would prefer to 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.

Valuation is complex, but we’re helping to make it simple.

Find out whether SES AI: is potentially over or undervalued by checking out our comprehensive analysis, which includes: fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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 into account 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.