Institutions profited after SOPHiA GENETICS SA's (NASDAQ:SOPH) market cap rose US$85m last week butindividual investors profited the most

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

Every investor in SOPHiA GENETICS SA (NASDAQ:SOPH) should be aware of the most powerful shareholder groups. With 51% stake, individual investors possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

Individual investors gained the most after market cap touched US$902m last week, while institutions who own 28% also benefitted.

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

View our latest analysis for SOPHiA GENETICS

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

What Does The Institutional Ownership Tell Us About SOPHiA GENETICS?

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.

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

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

We note that hedge funds don't have a meaningful investment in SOPHiA GENETICS. Looking at our data, we can see that the largest shareholder is Alychlo NV with 11% of shares outstanding. In comparison, the second and third largest shareholders hold about 11% and 5.3% of the stock. In addition, we found that Jurgi Camblong, the CEO has 3.5% of the shares allocated to their name.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of SOPHiA GENETICS

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

We can see that insiders own shares in SOPHiA GENETICS SA. In their own names, insiders own US$39m worth of stock in the US$902m company. 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, who are usually individual investors, hold a substantial 51% stake in SOPHiA GENETICS, suggesting it is a fairly popular stock. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Private Equity Ownership

With an ownership of 16%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 3 warning signs for SOPHiA GENETICS (1 is a bit unpleasant!) that you should be aware of before investing here.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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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