Painful week for retail investors invested in Avacta Group Plc (LON:AVCT) after 14% drop, institutions also suffered losses

Key Insights

• The considerable ownership by retail investors in Avacta Group indicates that they collectively have a greater say in management and business strategy
• 39% of the business is held by the top 25 shareholders
• 41% of Avacta Group is held by Institutions

Every investor in Avacta Group Plc (LON:AVCT) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are retail investors with 58% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While institutions, who own 41% shares weren’t spared from last week’s UK£36m market cap drop, retail investors as a group suffered the maximum losses

Let's take a closer look to see what the different types of shareholders can tell us about Avacta Group.

Check out our latest analysis for Avacta Group

What Does The Institutional Ownership Tell Us About Avacta Group?

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.

We can see that Avacta Group does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Avacta Group's earnings history below. Of course, the future is what really matters.

Avacta Group is not owned by hedge funds. A J Bell Holdings Limited, Asset Management Arm is currently the company's largest shareholder with 7.3% of shares outstanding. With 5.3% and 5.0% of the shares outstanding respectively, HBOS Investment Fund Managers Limited and Jarvis Securities plc, Asset Management Arm are the second and third largest shareholders.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

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 Avacta Group

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.

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 less than 1% of Avacta Group Plc. It seems the board members have no more than UK£444k worth of shares in the UK£221m company. Many investors in smaller companies prefer to see the board more heavily invested. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 58% of Avacta Group shares. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Avacta Group (at least 2 which can't be ignored) , and understanding them should be part of your investment process.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com