After losing 49% in the past year, Vertical Aerospace Ltd. (NYSE:EVTL) hedge funds owners must be relieved by the recent gain

Key Insights

• Given the large stake in the stock by institutions, Vertical Aerospace's stock price might be vulnerable to their trading decisions
• Mudrick Capital Management, L.P. owns 54% of the company
• Insiders have sold recently

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To get a sense of who is truly in control of Vertical Aerospace Ltd. (NYSE:EVTL), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are hedge funds with 54% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Hedge funds investors would probably welcome last week's 12% increase in the share price after a year of 49% losses as a sign that returns may to begin trending higher.

In the chart below, we zoom in on the different ownership groups of Vertical Aerospace.

Check out our latest analysis for Vertical Aerospace

What Does The Institutional Ownership Tell Us About Vertical Aerospace?

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 Vertical Aerospace does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Vertical Aerospace's earnings history below. Of course, the future is what really matters.

Our data indicates that hedge funds own 54% of Vertical Aerospace. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. The company's largest shareholder is Mudrick Capital Management, L.P., with ownership of 54%. This implies that they have majority interest control of the future of the company. In comparison, the second and third largest shareholders hold about 4.1% and 3.5% of the stock.

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 understand of a stock's expected performance. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Vertical Aerospace

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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.

We can see that insiders own shares in Vertical Aerospace Ltd.. It has a market capitalization of just US$423m, and insiders have US$15m worth of shares, in their own names. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 26% stake in the company, and hence can't easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Vertical Aerospace better, we need to consider many other factors. Take risks for example - Vertical Aerospace has 7 warning signs (and 5 which are significant) we think you should know about.

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.