Institutional owners may take dramatic actions as Semler Scientific, Inc.'s (NASDAQ:SMLR) recent 10% drop adds to one-year losses

Key Insights

• Institutions' substantial holdings in Semler Scientific implies that they have significant influence over the company's share price
• A total of 10 investors have a majority stake in the company with 50% ownership
• Insiders have sold recently

If you want to know who really controls Semler Scientific, Inc. (NASDAQ:SMLR), then you'll have to look at the makeup of its share registry. With 47% 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.

As a result, institutional investors endured the highest losses last week after market cap fell by US$18m. This set of investors may especially be concerned about the current loss, which adds to a one-year loss of 14% for shareholders. Often called “market movers", 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 Semler Scientific which might hurt individual investors.

In the chart below, we zoom in on the different ownership groups of Semler Scientific.

View our latest analysis for Semler Scientific

What Does The Institutional Ownership Tell Us About Semler Scientific?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

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

Semler Scientific is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Hui-Chung Chang with 13% of shares outstanding. Cerity Partners LLC is the second largest shareholder owning 10% of common stock, and Eric Semler holds about 9.3% of the company stock. Eric Semler, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board. Furthermore, CEO Douglas Murphy-Chutorian is the owner of 0.7% of the company's shares.

On further inspection, we found that more than half the company's shares are owned by the top 10 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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 is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Semler Scientific

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. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own a reasonable proportion of Semler Scientific, Inc.. It has a market capitalization of just US$156m, and insiders have US$36m worth of shares in their own names. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

With a 30% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Semler Scientific. 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.

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. For instance, we've identified 2 warning signs for Semler Scientific (1 can't be ignored) that you should be aware of.

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.