Six Flags’ ownership is dominated by hedge funds


Nov. 20 2019, Updated 1:02 p.m. ET

Institutional investors

The influence of institutional investors has grown over time since the proportion of US public equities managed by institutions has risen steadily over the past six decades. Institutional investors help promote management accountability and are also known to ameliorate price discovery.

Institutional shareholders hold ~86% of Six Flags Entertainment Corp. (SIX). Most of the institutional investors are hedge funds. The top 20 hedge funds own ~25% of Six Flags Entertainment.

When looking at the above chart, you can see that hedge funds such as H Partners Management has the largest stake in Six Flags at 17.5%, which is worth close to $707 million.

Some institutional investors, mostly hedge funds, take an activist approach to influence the corporate governance matters. Such institutional shareholders are commonly referred to as activist shareholders.

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Insider holding

Investors should also take into account the insider ownership before they invest in a company. Managements that own shares in their companies show they’re confident in the company’s business. Jim Reid-Anderson, Six Flags Entertainment’s chairman, president, and CEO (chief executive officer), holds 3.5% of the company and is thereby in the top ten shareholders of Six Flags.

It’s important for an investor to take into account the fundamentals and valuations of the company before investing. An investor should not rely solely on the ownership structure of a company.

Theme park companies such as Cedar Fair (FUN) and SeaWorld Entertainment (SEAS) have insider ownership of around 1.0% and 2.4%, respectively. Six Flags Entertainment (SIX) has an insider ownership of 5.1%.

ETFs such as the Consumer Discretionary Select Sector SPDR Fund (XLY) and the Vanguard Consumer Discretionary Index Fund (VCR) invest heavily in leisure companies.


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