Could The STRATA Skin Sciences, Inc. (NASDAQ:SSKN) Ownership Structure Tell Us Something Useful?

Every investor in STRATA Skin Sciences, Inc. (NASDAQ:SSKN) should be aware of the most powerful shareholder groups. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. Companies that have been privatized tend to have low insider ownership.

STRATA Skin Sciences is not a large company by global standards. It has a market capitalization of US$42m, which means it wouldn’t have the attention of many institutional investors. Our analysis of the ownership of the company, below, shows that institutions own shares in the company. Let’s delve deeper into each type of owner, to discover more about STRATA Skin Sciences.

See our latest analysis for STRATA Skin Sciences

NasdaqCM:SSKN Ownership Summary June 2nd 2020
NasdaqCM:SSKN Ownership Summary June 2nd 2020

What Does The Institutional Ownership Tell Us About STRATA Skin Sciences?

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.

We can see that STRATA Skin Sciences does have institutional investors; and they hold 11% of the stock. 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. 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 STRATA Skin Sciences, (below). Of course, keep in mind that there are other factors to consider, too.

NasdaqCM:SSKN Income Statement June 2nd 2020
NasdaqCM:SSKN Income Statement June 2nd 2020

It looks like hedge funds own 26% of STRATA Skin Sciences shares. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. Accelmed Fund is currently the largest shareholder, with 35% of shares outstanding. The second largest shareholder with 9.4%, is Nantahala Capital Management, LLC, followed by Broadfin Capital, LLC, with an ownership of 8.6%.

Our analysis suggests that the top 3 shareholders collectively control 53% of the company’s shares, implying that they have considerable power to influence the company’s decisions.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of STRATA Skin Sciences

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 most recent data indicates that insiders own some shares in STRATA Skin Sciences, Inc.. In their own names, insiders own US$1.3m worth of stock in the US$42m company. It is good to see some investment by insiders, but I usually like to see higher insider holdings. It might be worth checking if those insiders have been buying.

General Public Ownership

With a 25% ownership, the general public have some degree of sway over SSKN. While this group can’t necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

Private equity firms hold a 35% stake in SSKN. This suggests they can be influential in key policy decisions. 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 STRATA Skin Sciences better, we need to consider many other factors. For instance, we’ve identified 4 warning signs for STRATA Skin Sciences that you should be aware of.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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. 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. Thank you for reading.