In the wake of AbCellera Biologics Inc.'s (NASDAQ:ABCL) latest US$91m market cap drop, institutional owners may be forced to take severe actions

Key Insights

• Significantly high institutional ownership implies AbCellera Biologics' stock price is sensitive to their trading actions
• 50% of the business is held by the top 8 shareholders
• Insiders own 27% of AbCellera Biologics

To get a sense of who is truly in control of AbCellera Biologics Inc. (NASDAQ:ABCL), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 36% to be precise, is institutions. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And so it follows that institutional investors was the group most impacted after the company's market cap fell to US$1.1b last week after a 7.4% drop in the share price. Needless to say, the recent loss which further adds to the one-year loss to shareholders of 46% might not go down well especially with this category of shareholders. Institutions or "liquidity providers" control large sums of money and therefore, these types of investors usually have a lot of influence over stock price movements. Hence, if weakness in AbCellera Biologics' share price continues, institutional investors may feel compelled to sell the stock, which might not be ideal for individual investors.

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

View our latest analysis for AbCellera Biologics

What Does The Institutional Ownership Tell Us About AbCellera Biologics?

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.

We can see that AbCellera Biologics 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 AbCellera Biologics' earnings history below. Of course, the future is what really matters.

It looks like hedge funds own 7.8% of AbCellera Biologics 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. The company's CEO Carl Hansen is the largest shareholder with 19% of shares outstanding. With 8.2% and 7.8% of the shares outstanding respectively, Baillie Gifford & Co. and Baker Bros. Advisors LP are the second and third largest shareholders.

We also observed that the top 8 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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. 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 AbCellera Biologics

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Our information suggests that insiders maintain a significant holding in AbCellera Biologics Inc.. It has a market capitalization of just US$1.1b, and insiders have US$302m worth of shares in their own names. That's quite significant. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 30% ownership, the general public, mostly comprising of individual investors, have some degree of sway over AbCellera Biologics. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand AbCellera Biologics better, we need to consider many other factors. Be aware that AbCellera Biologics is showing 1 warning sign in our investment analysis , you should know about...

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.