Institutional investors may adopt severe steps after Achieve Life Sciences, Inc.'s (NASDAQ:ACHV) latest 15% drop adds to a year losses

Key Insights

• Institutions' substantial holdings in Achieve Life Sciences 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
• Recent purchases by insiders

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A look at the shareholders of Achieve Life Sciences, Inc. (NASDAQ:ACHV) can tell us which group is most powerful. The group holding the most number of shares in the company, around 46% to be precise, is institutions. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And institutional investors saw their holdings value drop by 15% last week. The recent loss, which adds to a one-year loss of 34% for stockholders, may not sit well with this group of investors. Also referred to as "smart money", institutions have a lot of sway over how a stock's price moves. Hence, if weakness in Achieve Life Sciences' share price continues, institutional investors may feel compelled to sell the stock, which might not be ideal for individual investors.

Let's take a closer look to see what the different types of shareholders can tell us about Achieve Life Sciences.

View our latest analysis for Achieve Life Sciences

What Does The Institutional Ownership Tell Us About Achieve Life Sciences?

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 Achieve Life Sciences does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Achieve Life Sciences' earnings history below. Of course, the future is what really matters.

Our data indicates that hedge funds own 10% of Achieve Life Sciences. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Dialectic Capital Management, LP is currently the largest shareholder, with 10% of shares outstanding. The second and third largest shareholders are Franklin Resources, Inc. and Propel Bio Management, LLC, with an equal amount of shares to their name at 7.1%.

We also observed that the top 10 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 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 are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Achieve Life Sciences

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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.

We can report that insiders do own shares in Achieve Life Sciences, Inc.. As individuals, the insiders collectively own US$5.8m worth of the US$113m company. It is good to see some investment by insiders, but we usually like to see higher insider holdings. It might be worth checking if those insiders have been buying.

General Public Ownership

With a 39% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Achieve Life Sciences. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

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. Case in point: We've spotted 3 warning signs for Achieve Life Sciences you should be aware of, and 2 of them are a bit unpleasant.

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.