GeneDx Holdings Corp.'s (NASDAQ:WGS) large institutional owners must be happy as stock continues to impress, up 7.5% over the past week

Key Insights

• Given the large stake in the stock by institutions, GeneDx Holdings' stock price might be vulnerable to their trading decisions
• A total of 4 investors have a majority stake in the company with 50% ownership
• Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock

Every investor in GeneDx Holdings Corp. (NASDAQ:WGS) should be aware of the most powerful shareholder groups. We can see that institutions own the lion's share in the company with 47% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And last week, institutional investors ended up benefitting the most after the company hit US$902m in market cap. One-year return to shareholders is currently 333% and last week’s gain was the icing on the cake.

In the chart below, we zoom in on the different ownership groups of GeneDx Holdings.

View our latest analysis for GeneDx Holdings

What Does The Institutional Ownership Tell Us About GeneDx Holdings?

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.

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

It looks like hedge funds own 9.5% of GeneDx Holdings shares. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Mount Sinai School Of Medicine, Endowment Arm is currently the company's largest shareholder with 14% of shares outstanding. With 13% and 13% of the shares outstanding respectively, Casdin Capital, LLC and OPKO Health, Inc. are the second and third largest shareholders.

Our research also brought to light the fact that roughly 50% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.

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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of GeneDx Holdings

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.

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.

Shareholders would probably be interested to learn that insiders own shares in GeneDx Holdings Corp.. It has a market capitalization of just US$902m, and insiders have US$21m worth of shares, in their own names. 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

With a 14% ownership, the general public, mostly comprising of individual investors, have some degree of sway over GeneDx Holdings. 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

Private equity firms hold a 13% stake in GeneDx Holdings. This suggests they can be influential in key policy decisions. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Public Company Ownership

We can see that public companies hold 13% of the GeneDx Holdings shares on issue. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should learn about the 3 warning signs we've spotted with GeneDx Holdings (including 1 which is potentially serious) .

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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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com