Could Akebia Therapeutics, Inc.’s (NASDAQ:AKBA) Investor Composition Influence The Stock Price?

The big shareholder groups in Akebia Therapeutics, Inc. (NASDAQ:AKBA) have power over the company. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. Companies that used to be publicly owned tend to have lower insider ownership.

Akebia Therapeutics is not a large company by global standards. It has a market capitalization of US$527m, which means it wouldn’t have the attention of many institutional investors. In the chart below below, we can see that institutional investors have bought into the company. Let’s take a closer look to see what the different types of shareholder can tell us about AKBA.

See our latest analysis for Akebia Therapeutics

NasdaqGM:AKBA Ownership Summary, August 22nd 2019
NasdaqGM:AKBA Ownership Summary, August 22nd 2019

What Does The Institutional Ownership Tell Us About Akebia Therapeutics?

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.

Akebia Therapeutics already has institutions on the share registry. Indeed, they own 55% of the company. 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. When multiple institutions own a stock, there’s always a risk that they are in a ‘crowded trade’. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Akebia Therapeutics’s historic earnings and revenue, below, but keep in mind there’s always more to the story.

NasdaqGM:AKBA Income Statement, August 22nd 2019
NasdaqGM:AKBA Income Statement, August 22nd 2019

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. It looks like hedge funds own 21% of Akebia Therapeutics shares. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Akebia Therapeutics

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.

I can report that insiders do own shares in Akebia Therapeutics, Inc.. In their own names, insiders own US$13m worth of stock in the US$527m company. 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

The general public holds a 22% stake in AKBA. 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.

I always like to check for a history of revenue growth. You can too, by accessing this free chart of historic revenue and earnings in this detailed graph.

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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