Institutional investors are eHealth, Inc.'s (NASDAQ:EHTH) biggest bettors and were rewarded after last week's US$20m market cap gain

Key Insights

• Significantly high institutional ownership implies eHealth's stock price is sensitive to their trading actions
• 51% of the business is held by the top 16 shareholders
• Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business

Our free stock report includes 1 warning sign investors should be aware of before investing in eHealth. Read for free now.

A look at the shareholders of eHealth, Inc. (NASDAQ:EHTH) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are institutions with 47% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And last week, institutional investors ended up benefitting the most after the company hit US$187m in market cap. The gains from last week would have further boosted the one-year return to shareholders which currently stand at 41%.

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

Check out our latest analysis for eHealth

What Does The Institutional Ownership Tell Us About eHealth?

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.

As you can see, institutional investors have a fair amount of stake in eHealth. 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 eHealth, (below). Of course, keep in mind that there are other factors to consider, too.

It looks like hedge funds own 21% of eHealth shares. That's interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. 8 Knots Management, LLC is currently the company's largest shareholder with 8.0% of shares outstanding. For context, the second largest shareholder holds about 6.7% of the shares outstanding, followed by an ownership of 6.3% by the third-largest shareholder. Additionally, the company's CEO Francis Soistman directly holds 2.3% of the total shares outstanding.

Looking at the shareholder registry, we can see that 51% of the ownership is controlled by the top 16 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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

Insider Ownership Of eHealth

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.

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.

Shareholders would probably be interested to learn that insiders own shares in eHealth, Inc.. In their own names, insiders own US$10m worth of stock in the US$187m company. Some would say this shows alignment of interests between shareholders and the board, though we generally prefer to see bigger insider holdings. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 27% stake in eHealth. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand eHealth better, we need to consider many other factors. For example, we've discovered 1 warning sign for eHealth that you should be aware of before investing here.

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.