Institutional investors may adopt severe steps after Accolade, Inc.'s (NASDAQ:ACCD) latest 5.9% drop adds to a year losses

September 26, 2022
  •  Updated
November 30, 2022
NasdaqGS:ACCD
Source: Shutterstock

A look at the shareholders of Accolade, Inc. (NASDAQ:ACCD) can tell us which group is most powerful. With 71% stake, institutions possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And so it follows that institutional investors was the group most impacted after the company's market cap fell to US$838m last week after a 5.9% drop in the share price. The recent loss, which adds to a one-year loss of 73% for stockholders, may not sit well with this group of investors. Often called “market makers”, institutions wield significant power in influencing the price dynamics of any stock. As a result, if the decline continues, institutional investors may be pressured to sell Accolade which might hurt individual investors.

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

However if you'd rather see where the opportunities and risks are within ACCD's industry, you can check out our analysis on the US Healthcare industry.

ownership-breakdown
NasdaqGS:ACCD Ownership Breakdown September 26th 2022

What Does The Institutional Ownership Tell Us About Accolade?

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.

Accolade 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 Accolade, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
NasdaqGS:ACCD Earnings and Revenue Growth September 26th 2022

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Accolade is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is ARK Investment Management LLC with 8.8% of shares outstanding. In comparison, the second and third largest shareholders hold about 8.2% and 7.9% of the stock.

On further inspection, we found that more than half the company's shares are owned by the top 8 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 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 Accolade

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.

Our most recent data indicates that insiders own some shares in Accolade, Inc.. In their own names, insiders own US$44m worth of stock in the US$838m company. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public-- including retail investors -- own 16% stake in the company, and hence can't easily be ignored. 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

With a stake of 7.6%, private equity firms could influence the Accolade board. 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 Accolade better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 3 warning signs for Accolade you should know about.

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.

Valuation is complex, but we're helping make it simple.

Find out whether Accolade is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis