Stock Analysis

Institutional investors are RaySearch Laboratories AB (publ)'s (STO:RAY B) biggest bettors and were rewarded after last week's kr267m market cap gain

Published
OM:RAY B

Key Insights

  • Given the large stake in the stock by institutions, RaySearch Laboratories' stock price might be vulnerable to their trading decisions
  • The top 9 shareholders own 51% of the company
  • Recent sales by insiders

Every investor in RaySearch Laboratories AB (publ) (STO:RAY B) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 62% to be precise, is institutions. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And last week, institutional investors ended up benefitting the most after the company hit kr2.5b in market cap. The one-year return on investment is currently 19% and last week's gain would have been more than welcomed.

Let's delve deeper into each type of owner of RaySearch Laboratories, beginning with the chart below.

Check out our latest analysis for RaySearch Laboratories

OM:RAY B Ownership Breakdown August 26th 2023

What Does The Institutional Ownership Tell Us About RaySearch Laboratories?

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.

RaySearch Laboratories already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 RaySearch Laboratories, (below). Of course, keep in mind that there are other factors to consider, too.

OM:RAY B Earnings and Revenue Growth August 26th 2023

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Hedge funds don't have many shares in RaySearch Laboratories. State Street Global Advisors, Inc. is currently the company's largest shareholder with 12% of shares outstanding. For context, the second largest shareholder holds about 7.7% of the shares outstanding, followed by an ownership of 7.0% by the third-largest shareholder. Furthermore, CEO Johan Lof is the owner of 0.6% of the company's shares.

On further inspection, we found that more than half the company's shares are owned by the top 9 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of RaySearch Laboratories

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Shareholders would probably be interested to learn that insiders own shares in RaySearch Laboratories AB (publ). It has a market capitalization of just kr2.5b, and insiders have kr211m worth of shares, in their own names. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 30% stake in RaySearch Laboratories. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

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. To that end, you should learn about the 2 warning signs we've spotted with RaySearch Laboratories (including 1 which is potentially serious) .

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.