Institutional investors in Lucira Health, Inc. (NASDAQ:LHDX) must be dismayed after prices dropped by 10% last week

By
Simply Wall St
Published
January 17, 2022
NasdaqGS:LHDX
Source: Shutterstock

A look at the shareholders of Lucira Health, Inc. (NASDAQ:LHDX) can tell us which group is most powerful. We can see that institutions own the lion's share in the company with 45% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As market cap fell to US$252m last week, institutional would have faced the highest losses than any other shareholder groups of the company.

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

View our latest analysis for Lucira Health

ownership-breakdown
NasdaqGS:LHDX Ownership Breakdown January 17th 2022

What Does The Institutional Ownership Tell Us About Lucira Health?

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.

As you can see, institutional investors have a fair amount of stake in Lucira Health. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Lucira Health's historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
NasdaqGS:LHDX Earnings and Revenue Growth January 17th 2022

Hedge funds don't have many shares in Lucira Health. The company's largest shareholder is EPIQ Capital Group, LLC, with ownership of 35%. Eclipse Ventures, LLC is the second largest shareholder owning 16% of common stock, and Seraph Group holds about 5.7% of the company stock. In addition, we found that Erik Engelson, the CEO has 0.8% of the shares allocated to their name.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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 Lucira Health

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. 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 some shares in Lucira Health, Inc.. In their own names, insiders own US$9.2m worth of stock in the US$252m company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 29% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Lucira Health. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Equity Ownership

With a stake of 22%, private equity firms could influence the Lucira Health board. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Lucira Health better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Lucira Health you should be aware of, and 1 of them is a bit unpleasant.

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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